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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3765

Public Law 110–343
110th Congress
An Act
To provide authority for the Federal Government to purchase and insure certain
types of troubled assets for the purposes of providing stability to and preventing
disruption in the economy and financial system and protecting taxpayers, to
amend the Internal Revenue Code of 1986 to provide incentives for energy production and conservation, to extend certain expiring provisions, to provide individual
income tax relief, and for other purposes.

Oct. 3, 2008
[H.R. 1424]

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

DIVISION A—EMERGENCY ECONOMIC
STABILIZATION

Emergency
Economic
Stabilization Act
of 2008.

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

(a) SHORT TITLE.—This division may be cited as the ‘‘Emergency
Economic Stabilization Act of 2008’’.
(b) TABLE OF CONTENTS.—The table of contents for this division
is as follows:

12 USC 5201
note.

Sec. 1. Short title and table of contents.
Sec. 2. Purposes.
Sec. 3. Definitions.

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Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
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Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

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101.
102.
103.
104.
105.
106.
107.
108.
109.
110.
111.
112.
113.
114.
115.
116.
117.
118.
119.
120.
121.
122.
123.
124.
125.

TITLE I—TROUBLED ASSETS RELIEF PROGRAM
Purchases of troubled assets.
Insurance of troubled assets.
Considerations.
Financial Stability Oversight Board.
Reports.
Rights; management; sale of troubled assets; revenues and sale proceeds.
Contracting procedures.
Conflicts of interest.
Foreclosure mitigation efforts.
Assistance to homeowners.
Executive compensation and corporate governance.
Coordination with foreign authorities and central banks.
Minimization of long-term costs and maximization of benefits for taxpayers.
Market transparency.
Graduated authorization to purchase.
Oversight and audits.
Study and report on margin authority.
Funding.
Judicial review and related matters.
Termination of authority.
Special Inspector General for the Troubled Asset Relief Program.
Increase in statutory limit on the public debt.
Credit reform.
HOPE for Homeowners amendments.
Congressional Oversight Panel.

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122 STAT. 3766

PUBLIC LAW 110–343—OCT. 3, 2008

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

126.
127.
128.
129.
130.
131.
132.
133.
134.
135.
136.

FDIC authority.
Cooperation with the FBI.
Acceleration of effective date.
Disclosures on exercise of loan authority.
Technical corrections.
Exchange Stabilization Fund reimbursement.
Authority to suspend mark-to-market accounting.
Study on mark-to-market accounting.
Recoupment.
Preservation of authority.
Temporary increase in deposit and share insurance coverage.

TITLE II—BUDGET-RELATED PROVISIONS
Sec. 201. Information for congressional support agencies.
Sec. 202. Reports by the Office of Management and Budget and the Congressional
Budget Office.
Sec. 203. Analysis in President’s Budget.
Sec. 204. Emergency treatment.
TITLE III—TAX PROVISIONS
Sec. 301. Gain or loss from sale or exchange of certain preferred stock.
Sec. 302. Special rules for tax treatment of executive compensation of employers
participating in the troubled assets relief program.
Sec. 303. Extension of exclusion of income from discharge of qualified principal residence indebtedness.
12 USC 5201.

SEC. 2. PURPOSES.

The purposes of this Act are—
(1) to immediately provide authority and facilities that
the Secretary of the Treasury can use to restore liquidity and
stability to the financial system of the United States; and
(2) to ensure that such authority and such facilities are
used in a manner that—
(A) protects home values, college funds, retirement
accounts, and life savings;
(B) preserves homeownership and promotes jobs and
economic growth;
(C) maximizes overall returns to the taxpayers of the
United States; and
(D) provides public accountability for the exercise of
such authority.

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12 USC 5202.

SEC. 3. DEFINITIONS.

For purposes of this Act, the following definitions shall apply:
(1) APPROPRIATE COMMITTEES OF CONGRESS.—The term
‘‘appropriate committees of Congress’’ means—
(A) the Committee on Banking, Housing, and Urban
Affairs, the Committee on Finance, the Committee on the
Budget, and the Committee on Appropriations of the
Senate; and
(B) the Committee on Financial Services, the Committee on Ways and Means, the Committee on the Budget,
and the Committee on Appropriations of the House of Representatives.
(2) BOARD.—The term ‘‘Board’’ means the Board of Governors of the Federal Reserve System.
(3) CONGRESSIONAL SUPPORT AGENCIES.—The term
‘‘congressional support agencies’’ means the Congressional
Budget Office and the Joint Committee on Taxation.
(4) CORPORATION.—The term ‘‘Corporation’’ means the Federal Deposit Insurance Corporation.
(5) FINANCIAL INSTITUTION.—The term ‘‘financial institution’’ means any institution, including, but not limited to, any

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3767

bank, savings association, credit union, security broker or
dealer, or insurance company, established and regulated under
the laws of the United States or any State, territory, or possession of the United States, the District of Columbia, Commonwealth of Puerto Rico, Commonwealth of Northern Mariana
Islands, Guam, American Samoa, or the United States Virgin
Islands, and having significant operations in the United States,
but excluding any central bank of, or institution owned by,
a foreign government.
(6) FUND.—The term ‘‘Fund’’ means the Troubled Assets
Insurance Financing Fund established under section 102.
(7) SECRETARY.—The term ‘‘Secretary’’ means the Secretary
of the Treasury.
(8) TARP.—The term ‘‘TARP’’ means the Troubled Asset
Relief Program established under section 101.
(9) TROUBLED ASSETS.—The term ‘‘troubled assets’’ means—
(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based
on or related to such mortgages, that in each case was
originated or issued on or before March 14, 2008, the
purchase of which the Secretary determines promotes
financial market stability; and
(B) any other financial instrument that the Secretary,
after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market
stability, but only upon transmittal of such determination,
in writing, to the appropriate committees of Congress.

TITLE I—TROUBLED ASSETS RELIEF
PROGRAM

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SEC. 101. PURCHASES OF TROUBLED ASSETS.

12 USC 5211.

(a) OFFICES; AUTHORITY.—
(1) AUTHORITY.—The Secretary is authorized to establish
the Troubled Asset Relief Program (or ‘‘TARP’’) to purchase,
and to make and fund commitments to purchase, troubled
assets from any financial institution, on such terms and conditions as are determined by the Secretary, and in accordance
with this Act and the policies and procedures developed and
published by the Secretary.
(2) COMMENCEMENT OF PROGRAM.—Establishment of the
policies and procedures and other similar administrative
requirements imposed on the Secretary by this Act are not
intended to delay the commencement of the TARP.
(3) ESTABLISHMENT OF TREASURY OFFICE.—
(A) IN GENERAL.—The Secretary shall implement any
program under paragraph (1) through an Office of Financial
Stability, established for such purpose within the Office
of Domestic Finance of the Department of the Treasury,
which office shall be headed by an Assistant Secretary
of the Treasury, appointed by the President, by and with
the advice and consent of the Senate, except that an interim
Assistant Secretary may be appointed by the Secretary.
(B) CLERICAL AMENDMENTS.—

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122 STAT. 3768

Administration.

Contracts.
Financial agents.

Regulations.

Publication.
Deadline.

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12 USC 5212.

PUBLIC LAW 110–343—OCT. 3, 2008

(i) TITLE 5.—Section 5315 of title 5, United States
Code, is amended in the item relating to Assistant
Secretaries of the Treasury, by striking ‘‘(9)’’ and
inserting ‘‘(10)’’.
(ii) TITLE 31.—Section 301(e) of title 31, United
States Code, is amended by striking ‘‘9’’ and inserting
‘‘10’’.
(b) CONSULTATION.—In exercising the authority under this section, the Secretary shall consult with the Board, the Corporation,
the Comptroller of the Currency, the Director of the Office of Thrift
Supervision, the Chairman of the National Credit Union Administration Board, and the Secretary of Housing and Urban Development.
(c) NECESSARY ACTIONS.—The Secretary is authorized to take
such actions as the Secretary deems necessary to carry out the
authorities in this Act, including, without limitation, the following:
(1) The Secretary shall have direct hiring authority with
respect to the appointment of employees to administer this
Act.
(2) Entering into contracts, including contracts for services
authorized by section 3109 of title 5, United States Code.
(3) Designating financial institutions as financial agents
of the Federal Government, and such institutions shall perform
all such reasonable duties related to this Act as financial agents
of the Federal Government as may be required.
(4) In order to provide the Secretary with the flexibility
to manage troubled assets in a manner designed to minimize
cost to the taxpayers, establishing vehicles that are authorized,
subject to supervision by the Secretary, to purchase, hold, and
sell troubled assets and issue obligations.
(5) Issuing such regulations and other guidance as may
be necessary or appropriate to define terms or carry out the
authorities or purposes of this Act.
(d) PROGRAM GUIDELINES.—Before the earlier of the end of
the 2-business-day period beginning on the date of the first purchase
of troubled assets pursuant to the authority under this section
or the end of the 45-day period beginning on the date of enactment
of this Act, the Secretary shall publish program guidelines,
including the following:
(1) Mechanisms for purchasing troubled assets.
(2) Methods for pricing and valuing troubled assets.
(3) Procedures for selecting asset managers.
(4) Criteria for identifying troubled assets for purchase.
(e) PREVENTING UNJUST ENRICHMENT.—In making purchases
under the authority of this Act, the Secretary shall take such
steps as may be necessary to prevent unjust enrichment of financial
institutions participating in a program established under this section, including by preventing the sale of a troubled asset to the
Secretary at a higher price than what the seller paid to purchase
the asset. This subsection does not apply to troubled assets acquired
in a merger or acquisition, or a purchase of assets from a financial
institution in conservatorship or receivership, or that has initiated
bankruptcy proceedings under title 11, United States Code.
SEC. 102. INSURANCE OF TROUBLED ASSETS.

(a) AUTHORITY.—

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3769

(1) IN GENERAL.—If the Secretary establishes the program
authorized under section 101, then the Secretary shall establish
a program to guarantee troubled assets originated or issued
prior to March 14, 2008, including mortgage-backed securities.
(2) GUARANTEES.—In establishing any program under this
subsection, the Secretary may develop guarantees of troubled
assets and the associated premiums for such guarantees. Such
guarantees and premiums may be determined by category or
class of the troubled assets to be guaranteed.
(3) EXTENT OF GUARANTEE.—Upon request of a financial
institution, the Secretary may guarantee the timely payment
of principal of, and interest on, troubled assets in amounts
not to exceed 100 percent of such payments. Such guarantee
may be on such terms and conditions as are determined by
the Secretary, provided that such terms and conditions are
consistent with the purposes of this Act.
(b) REPORTS.—Not later than 90 days after the date of enactment of this Act, the Secretary shall report to the appropriate
committees of Congress on the program established under subsection (a).
(c) PREMIUMS.—
(1) IN GENERAL.—The Secretary shall collect premiums
from any financial institution participating in the program
established under subsection (a). Such premiums shall be in
an amount that the Secretary determines necessary to meet
the purposes of this Act and to provide sufficient reserves
pursuant to paragraph (3).
(2) AUTHORITY TO BASE PREMIUMS ON PRODUCT RISK.—
In establishing any premium under paragraph (1), the Secretary may provide for variations in such rates according to
the credit risk associated with the particular troubled asset
that is being guaranteed. The Secretary shall publish the methodology for setting the premium for a class of troubled assets
together with an explanation of the appropriateness of the
class of assets for participation in the program established
under this section. The methodology shall ensure that the premium is consistent with paragraph (3).
(3) MINIMUM LEVEL.—The premiums referred to in paragraph (1) shall be set by the Secretary at a level necessary
to create reserves sufficient to meet anticipated claims, based
on an actuarial analysis, and to ensure that taxpayers are
fully protected.
(4) ADJUSTMENT TO PURCHASE AUTHORITY.—The purchase
authority limit in section 115 shall be reduced by an amount
equal to the difference between the total of the outstanding
guaranteed obligations and the balance in the Troubled Assets
Insurance Financing Fund.
(d) TROUBLED ASSETS INSURANCE FINANCING FUND.—
(1) DEPOSITS.—The Secretary shall deposit fees collected
under this section into the Fund established under paragraph
(2).
(2) ESTABLISHMENT.—There is established a Troubled
Assets Insurance Financing Fund that shall consist of the
amounts collected pursuant to paragraph (1), and any balance
in such fund shall be invested by the Secretary in United
States Treasury securities, or kept in cash on hand or on
deposit, as necessary.

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Methodology.
Publication.

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122 STAT. 3770

PUBLIC LAW 110–343—OCT. 3, 2008
(3) PAYMENTS FROM FUND.—The Secretary shall make payments from amounts deposited in the Fund to fulfill obligations
of the guarantees provided to financial institutions under subsection (a).

12 USC 5213.

SEC. 103. CONSIDERATIONS.

In exercising the authorities granted in this Act, the Secretary
shall take into consideration—
(1) protecting the interests of taxpayers by maximizing
overall returns and minimizing the impact on the national
debt;
(2) providing stability and preventing disruption to financial markets in order to limit the impact on the economy
and protect American jobs, savings, and retirement security;
(3) the need to help families keep their homes and to
stabilize communities;
(4) in determining whether to engage in a direct purchase
from an individual financial institution, the long-term viability
of the financial institution in determining whether the purchase
represents the most efficient use of funds under this Act;
(5) ensuring that all financial institutions are eligible to
participate in the program, without discrimination based on
size, geography, form of organization, or the size, type, and
number of assets eligible for purchase under this Act;
(6) providing financial assistance to financial institutions,
including those serving low- and moderate-income populations
and other underserved communities, and that have assets less
than $1,000,000,000, that were well or adequately capitalized
as of June 30, 2008, and that as a result of the devaluation
of the preferred government-sponsored enterprises stock will
drop one or more capital levels, in a manner sufficient to
restore the financial institutions to at least an adequately
capitalized level;
(7) the need to ensure stability for United States public
instrumentalities, such as counties and cities, that may have
suffered significant increased costs or losses in the current
market turmoil;
(8) protecting the retirement security of Americans by purchasing troubled assets held by or on behalf of an eligible
retirement plan described in clause (iii), (iv), (v), or (vi) of
section 402(c)(8)(B) of the Internal Revenue Code of 1986, except
that such authority shall not extend to any compensation
arrangements subject to section 409A of such Code; and
(9) the utility of purchasing other real estate owned and
instruments backed by mortgages on multifamily properties.

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12 USC 5214.

SEC. 104. FINANCIAL STABILITY OVERSIGHT BOARD.

(a) ESTABLISHMENT.—There is established the Financial Stability Oversight Board, which shall be responsible for—
(1) reviewing the exercise of authority under a program
developed in accordance with this Act, including—
(A) policies implemented by the Secretary and the
Office of Financial Stability created under sections 101
and 102, including the appointment of financial agents,
the designation of asset classes to be purchased, and plans
for the structure of vehicles used to purchase troubled
assets; and

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3771

(B) the effect of such actions in assisting American
families in preserving home ownership, stabilizing financial
markets, and protecting taxpayers;
(2) making recommendations, as appropriate, to the Secretary regarding use of the authority under this Act; and
(3) reporting any suspected fraud, misrepresentation, or
malfeasance to the Special Inspector General for the Troubled
Assets Relief Program or the Attorney General of the United
States, consistent with section 535(b) of title 28, United States
Code.
(b) MEMBERSHIP.—The Financial Stability Oversight Board
shall be comprised of—
(1) the Chairman of the Board of Governors of the Federal
Reserve System;
(2) the Secretary;
(3) the Director of the Federal Housing Finance Agency;
(4) the Chairman of the Securities Exchange Commission;
and
(5) the Secretary of Housing and Urban Development.
(c) CHAIRPERSON.—The chairperson of the Financial Stability
Oversight Board shall be elected by the members of the Board
from among the members other than the Secretary.
(d) MEETINGS.—The Financial Stability Oversight Board shall
meet 2 weeks after the first exercise of the purchase authority
of the Secretary under this Act, and monthly thereafter.
(e) ADDITIONAL AUTHORITIES.—In addition to the responsibilities described in subsection (a), the Financial Stability Oversight
Board shall have the authority to ensure that the policies implemented by the Secretary are—
(1) in accordance with the purposes of this Act;
(2) in the economic interests of the United States; and
(3) consistent with protecting taxpayers, in accordance with
section 113(a).
(f) CREDIT REVIEW COMMITTEE.—The Financial Stability Oversight Board may appoint a credit review committee for the purpose
of evaluating the exercise of the purchase authority provided under
this Act and the assets acquired through the exercise of such
authority, as the Financial Stability Oversight Board determines
appropriate.
(g) REPORTS.—The Financial Stability Oversight Board shall
report to the appropriate committees of Congress and the Congressional Oversight Panel established under section 125, not less frequently than quarterly, on the matters described under subsection
(a)(1).
(h) TERMINATION.—The Financial Stability Oversight Board,
and its authority under this section, shall terminate on the expiration of the 15-day period beginning upon the later of—
(1) the date that the last troubled asset acquired by the
Secretary under section 101 has been sold or transferred out
of the ownership or control of the Federal Government; or
(2) the date of expiration of the last insurance contract
issued under section 102.

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SEC. 105. REPORTS.

Reports.
Fraud.

12 USC 5215.

(a) IN GENERAL.—Before the expiration of the 60-day period
beginning on the date of the first exercise of the authority granted
in section 101(a), or of the first exercise of the authority granted

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122 STAT. 3772

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Deadline.

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PUBLIC LAW 110–343—OCT. 3, 2008

in section 102, whichever occurs first, and every 30-day period
thereafter, the Secretary shall report to the appropriate committees
of Congress, with respect to each such period—
(1) an overview of actions taken by the Secretary, including
the considerations required by section 103 and the efforts under
section 109;
(2) the actual obligation and expenditure of the funds provided for administrative expenses by section 118 during such
period and the expected expenditure of such funds in the subsequent period; and
(3) a detailed financial statement with respect to the exercise of authority under this Act, including—
(A) all agreements made or renewed;
(B) all insurance contracts entered into pursuant to
section 102;
(C) all transactions occurring during such period,
including the types of parties involved;
(D) the nature of the assets purchased;
(E) all projected costs and liabilities;
(F) operating expenses, including compensation for
financial agents;
(G) the valuation or pricing method used for each transaction; and
(H) a description of the vehicles established to exercise
such authority.
(b) TRANCHE REPORTS TO CONGRESS.—
(1) REPORTS.—The Secretary shall provide to the appropriate committees of Congress, at the times specified in paragraph (2), a written report, including—
(A) a description of all of the transactions made during
the reporting period;
(B) a description of the pricing mechanism for the
transactions;
(C) a justification of the price paid for and other financial terms associated with the transactions;
(D) a description of the impact of the exercise of such
authority on the financial system, supported, to the extent
possible, by specific data;
(E) a description of challenges that remain in the financial system, including any benchmarks yet to be achieved;
and
(F) an estimate of additional actions under the
authority provided under this Act that may be necessary
to address such challenges.
(2) TIMING.—The report required by this subsection shall
be submitted not later than 7 days after the date on which
commitments to purchase troubled assets under the authorities
provided in this Act first reach an aggregate of $50,000,000,000
and not later than 7 days after each $50,000,000,000 interval
of such commitments is reached thereafter.
(c) REGULATORY MODERNIZATION REPORT.—The Secretary shall
review the current state of the financial markets and the regulatory
system and submit a written report to the appropriate committees
of Congress not later than April 30, 2009, analyzing the current
state of the regulatory system and its effectiveness at overseeing
the participants in the financial markets, including the over-the-

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3773

counter swaps market and government-sponsored enterprises, and
providing recommendations for improvement, including—
(1) recommendations regarding—
(A) whether any participants in the financial markets
that are currently outside the regulatory system should
become subject to the regulatory system; and
(B) enhancement of the clearing and settlement of
over-the-counter swaps; and
(2) the rationale underlying such recommendations.
(d) SHARING OF INFORMATION.—Any report required under this
section shall also be submitted to the Congressional Oversight
Panel established under section 125.
(e) SUNSET.—The reporting requirements under this section
shall terminate on the later of—
(1) the date that the last troubled asset acquired by the
Secretary under section 101 has been sold or transferred out
of the ownership or control of the Federal Government; or
(2) the date of expiration of the last insurance contract
issued under section 102.
SEC. 106. RIGHTS; MANAGEMENT; SALE OF TROUBLED ASSETS; REVENUES AND SALE PROCEEDS.

12 USC 5216.

(a) EXERCISE OF RIGHTS.—The Secretary may, at any time,
exercise any rights received in connection with troubled assets
purchased under this Act.
(b) MANAGEMENT OF TROUBLED ASSETS.—The Secretary shall
have authority to manage troubled assets purchased under this
Act, including revenues and portfolio risks therefrom.
(c) SALE OF TROUBLED ASSETS.—The Secretary may, at any
time, upon terms and conditions and at a price determined by
the Secretary, sell, or enter into securities loans, repurchase transactions, or other financial transactions in regard to, any troubled
asset purchased under this Act.
(d) TRANSFER TO TREASURY.—Revenues of, and proceeds from
the sale of troubled assets purchased under this Act, or from the
sale, exercise, or surrender of warrants or senior debt instruments
acquired under section 113 shall be paid into the general fund
of the Treasury for reduction of the public debt.
(e) APPLICATION OF SUNSET TO TROUBLED ASSETS.—The
authority of the Secretary to hold any troubled asset purchased
under this Act before the termination date in section 120, or to
purchase or fund the purchase of a troubled asset under a commitment entered into before the termination date in section 120, is
not subject to the provisions of section 120.

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SEC. 107. CONTRACTING PROCEDURES.

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12 USC 5217.

(a) STREAMLINED PROCESS.—For purposes of this Act, the Secretary may waive specific provisions of the Federal Acquisition
Regulation upon a determination that urgent and compelling circumstances make compliance with such provisions contrary to the
public interest. Any such determination, and the justification for
such determination, shall be submitted to the Committees on Oversight and Government Reform and Financial Services of the House
of Representatives and the Committees on Homeland Security and
Governmental Affairs and Banking, Housing, and Urban Affairs
of the Senate within 7 days.
(b) ADDITIONAL CONTRACTING REQUIREMENTS.—In any solicitation or contract where the Secretary has, pursuant to subsection

Waiver authority.

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Deadline.

Minorities.

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122 STAT. 3774

PUBLIC LAW 110–343—OCT. 3, 2008

(a), waived any provision of the Federal Acquisition Regulation
pertaining to minority contracting, the Secretary shall develop and
implement standards and procedures to ensure, to the maximum
extent practicable, the inclusion and utilization of minorities (as
such term is defined in section 1204(c) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811
note)) and women, and minority- and women-owned businesses
(as such terms are defined in section 21A(r)(4) of the Federal
Home Loan Bank Act (12 U.S.C. 1441a(r)(4)), in that solicitation
or contract, including contracts to asset managers, servicers, property managers, and other service providers or expert consultants.
(c) ELIGIBILITY OF FDIC.—Notwithstanding subsections (a) and
(b), the Corporation—
(1) shall be eligible for, and shall be considered in, the
selection of asset managers for residential mortgage loans and
residential mortgage-backed securities; and
(2) shall be reimbursed by the Secretary for any services
provided.
SEC. 108. CONFLICTS OF INTEREST.

Regulations.

(a) STANDARDS REQUIRED.—The Secretary shall issue regulations or guidelines necessary to address and manage or to prohibit
conflicts of interest that may arise in connection with the administration and execution of the authorities provided under this Act,
including—
(1) conflicts arising in the selection or hiring of contractors
or advisors, including asset managers;
(2) the purchase of troubled assets;
(3) the management of the troubled assets held;
(4) post-employment restrictions on employees; and
(5) any other potential conflict of interest, as the Secretary
deems necessary or appropriate in the public interest.
(b) TIMING.—Regulations or guidelines required by this section
shall be issued as soon as practicable after the date of enactment
of this Act.

12 USC 5219.

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12 USC 5218.

SEC. 109. FORECLOSURE MITIGATION EFFORTS.

(a) RESIDENTIAL MORTGAGE LOAN SERVICING STANDARDS.—To
the extent that the Secretary acquires mortgages, mortgage backed
securities, and other assets secured by residential real estate,
including multifamily housing, the Secretary shall implement a
plan that seeks to maximize assistance for homeowners and use
the authority of the Secretary to encourage the servicers of the
underlying mortgages, considering net present value to the taxpayer, to take advantage of the HOPE for Homeowners Program
under section 257 of the National Housing Act or other available
programs to minimize foreclosures. In addition, the Secretary may
use loan guarantees and credit enhancements to facilitate loan
modifications to prevent avoidable foreclosures.
(b) COORDINATION.—The Secretary shall coordinate with the
Corporation, the Board (with respect to any mortgage or mortgagebacked securities or pool of securities held, owned, or controlled
by or on behalf of a Federal reserve bank, as provided in section
110(a)(1)(C)), the Federal Housing Finance Agency, the Secretary
of Housing and Urban Development, and other Federal Government
entities that hold troubled assets to attempt to identify opportunities for the acquisition of classes of troubled assets that will improve
the ability of the Secretary to improve the loan modification and

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restructuring process and, where permissible, to permit bona fide
tenants who are current on their rent to remain in their homes
under the terms of the lease. In the case of a mortgage on a
residential rental property, the plan required under this section
shall include protecting Federal, State, and local rental subsidies
and protections, and ensuring any modification takes into account
the need for operating funds to maintain decent and safe conditions
at the property.
(c) CONSENT TO REASONABLE LOAN MODIFICATION REQUESTS.—
Upon any request arising under existing investment contracts, the
Secretary shall consent, where appropriate, and considering net
present value to the taxpayer, to reasonable requests for loss mitigation measures, including term extensions, rate reductions, principal
write downs, increases in the proportion of loans within a trust
or other structure allowed to be modified, or removal of other
limitation on modifications.

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SEC. 110. ASSISTANCE TO HOMEOWNERS.

Residential
rental property.

12 USC 5220.

(a) DEFINITIONS.—As used in this section—
(1) the term ‘‘Federal property manager’’ means—
(A) the Federal Housing Finance Agency, in its capacity
as conservator of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation;
(B) the Corporation, with respect to residential mortgage loans and mortgage-backed securities held by any
bridge depository institution pursuant to section 11(n) of
the Federal Deposit Insurance Act; and
(C) the Board, with respect to any mortgage or mortgage-backed securities or pool of securities held, owned,
or controlled by or on behalf of a Federal reserve bank,
other than mortgages or securities held, owned, or controlled in connection with open market operations under
section 14 of the Federal Reserve Act (12 U.S.C. 353),
or as collateral for an advance or discount that is not
in default;
(2) the term ‘‘consumer’’ has the same meaning as in section
103 of the Truth in Lending Act (15 U.S.C. 1602);
(3) the term ‘‘insured depository institution’’ has the same
meaning as in section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813); and
(4) the term ‘‘servicer’’ has the same meaning as in section
6(i)(2) of the Real Estate Settlement Procedures Act of 1974
(12 U.S.C. 2605(i)(2)).
(b) HOMEOWNER ASSISTANCE BY AGENCIES.—
(1) IN GENERAL.—To the extent that the Federal property
manager holds, owns, or controls mortgages, mortgage backed
securities, and other assets secured by residential real estate,
including multifamily housing, the Federal property manager
shall implement a plan that seeks to maximize assistance for
homeowners and use its authority to encourage the servicers
of the underlying mortgages, and considering net present value
to the taxpayer, to take advantage of the HOPE for Homeowners Program under section 257 of the National Housing
Act or other available programs to minimize foreclosures.
(2) MODIFICATIONS.—In the case of a residential mortgage
loan, modifications made under paragraph (1) may include—
(A) reduction in interest rates;

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(B) reduction of loan principal; and
(C) other similar modifications.
(3) TENANT PROTECTIONS.—In the case of mortgages on
residential rental properties, modifications made under paragraph (1) shall ensure—
(A) the continuation of any existing Federal, State,
and local rental subsidies and protections; and
(B) that modifications take into account the need for
operating funds to maintain decent and safe conditions
at the property.
(4) TIMING.—Each Federal property manager shall develop
and begin implementation of the plan required by this subsection not later than 60 days after the date of enactment
of this Act.
(5) REPORTS TO CONGRESS.—Each Federal property manager shall, 60 days after the date of enactment of this Act
and every 30 days thereafter, report to Congress specific
information on the number and types of loan modifications
made and the number of actual foreclosures occurring during
the reporting period in accordance with this section.
(6) CONSULTATION.—In developing the plan required by
this subsection, the Federal property managers shall consult
with one another and, to the extent possible, utilize consistent
approaches to implement the requirements of this subsection.
(c) ACTIONS WITH RESPECT TO SERVICERS.—In any case in
which a Federal property manager is not the owner of a residential
mortgage loan, but holds an interest in obligations or pools of
obligations secured by residential mortgage loans, the Federal property manager shall—
(1) encourage implementation by the loan servicers of loan
modifications developed under subsection (b); and
(2) assist in facilitating any such modifications, to the
extent possible.
(d) LIMITATION.—The requirements of this section shall not
supersede any other duty or requirement imposed on the Federal
property managers under otherwise applicable law.

Deadline.

12 USC 5221.

Standards.

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SEC. 111. EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE.

(a) APPLICABILITY.—Any financial institution that sells troubled
assets to the Secretary under this Act shall be subject to the
executive compensation requirements of subsections (b) and (c) and
the provisions under the Internal Revenue Code of 1986, as provided
under the amendment by section 302, as applicable.
(b) DIRECT PURCHASES.—
(1) IN GENERAL.—Where the Secretary determines that the
purposes of this Act are best met through direct purchases
of troubled assets from an individual financial institution where
no bidding process or market prices are available, and the
Secretary receives a meaningful equity or debt position in the
financial institution as a result of the transaction, the Secretary
shall require that the financial institution meet appropriate
standards for executive compensation and corporate governance. The standards required under this subsection shall be
effective for the duration of the period that the Secretary holds
an equity or debt position in the financial institution.
(2) CRITERIA.—The standards required under this subsection shall include—

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(A) limits on compensation that exclude incentives for
senior executive officers of a financial institution to take
unnecessary and excessive risks that threaten the value
of the financial institution during the period that the Secretary holds an equity or debt position in the financial
institution;
(B) a provision for the recovery by the financial institution of any bonus or incentive compensation paid to a
senior executive officer based on statements of earnings,
gains, or other criteria that are later proven to be materially inaccurate; and
(C) a prohibition on the financial institution making
any golden parachute payment to its senior executive officer
during the period that the Secretary holds an equity or
debt position in the financial institution.
(3) DEFINITION.—For purposes of this section, the term
‘‘senior executive officer’’ means an individual who is one of
the top 5 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.
(c) AUCTION PURCHASES.—Where the Secretary determines that
the purposes of this Act are best met through auction purchases
of troubled assets, and only where such purchases per financial
institution in the aggregate exceed $300,000,000 (including direct
purchases), the Secretary shall prohibit, for such financial institution, any new employment contract with a senior executive officer
that provides a golden parachute in the event of an involuntary
termination, bankruptcy filing, insolvency, or receivership. The Secretary shall issue guidance to carry out this paragraph not later
than 2 months after the date of enactment of this Act, and such
guidance shall be effective upon issuance.
(d) SUNSET.—The provisions of subsection (c) shall apply only
to arrangements entered into during the period during which the
authorities under section 101(a) are in effect, as determined under
section 120.
SEC. 112. COORDINATION WITH FOREIGN AUTHORITIES AND CENTRAL
BANKS.

Employment.
Contracts.
Prohibition.

Guidance.
Deadline.
Effective date.

12 USC 5222.

The Secretary shall coordinate, as appropriate, with foreign
financial authorities and central banks to work toward the
establishment of similar programs by such authorities and central
banks. To the extent that such foreign financial authorities or
banks hold troubled assets as a result of extending financing to
financial institutions that have failed or defaulted on such financing,
such troubled assets qualify for purchase under section 101.

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SEC. 113. MINIMIZATION OF LONG-TERM COSTS AND MAXIMIZATION
OF BENEFITS FOR TAXPAYERS.

12 USC 5223.

(a) LONG-TERM COSTS AND BENEFITS.—
(1) MINIMIZING NEGATIVE IMPACT.—The Secretary shall use
the authority under this Act in a manner that will minimize
any potential long-term negative impact on the taxpayer, taking
into account the direct outlays, potential long-term returns
on assets purchased, and the overall economic benefits of the
program, including economic benefits due to improvements in
economic activity and the availability of credit, the impact

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PUBLIC LAW 110–343—OCT. 3, 2008

on the savings and pensions of individuals, and reductions
in losses to the Federal Government.
(2) AUTHORITY.—In carrying out paragraph (1), the Secretary shall—
(A) hold the assets to maturity or for resale for and
until such time as the Secretary determines that the
market is optimal for selling such assets, in order to maximize the value for taxpayers; and
(B) sell such assets at a price that the Secretary determines, based on available financial analysis, will maximize
return on investment for the Federal Government.
(3) PRIVATE SECTOR PARTICIPATION.—The Secretary shall
encourage the private sector to participate in purchases of
troubled assets, and to invest in financial institutions, consistent with the provisions of this section.
(b) USE OF MARKET MECHANISMS.—In making purchases under
this Act, the Secretary shall—
(1) make such purchases at the lowest price that the Secretary determines to be consistent with the purposes of this
Act; and
(2) maximize the efficiency of the use of taxpayer resources
by using market mechanisms, including auctions or reverse
auctions, where appropriate.
(c) DIRECT PURCHASES.—If the Secretary determines that use
of a market mechanism under subsection (b) is not feasible or
appropriate, and the purposes of the Act are best met through
direct purchases from an individual financial institution, the Secretary shall pursue additional measures to ensure that prices paid
for assets are reasonable and reflect the underlying value of the
asset.
(d) CONDITIONS ON PURCHASE AUTHORITY FOR WARRANTS AND
DEBT INSTRUMENTS.—
(1) IN GENERAL.—The Secretary may not purchase, or make
any commitment to purchase, any troubled asset under the
authority of this Act, unless the Secretary receives from the
financial institution from which such assets are to be purchased—
(A) in the case of a financial institution, the securities
of which are traded on a national securities exchange,
a warrant giving the right to the Secretary to receive
nonvoting common stock or preferred stock in such financial
institution, or voting stock with respect to which, the Secretary agrees not to exercise voting power, as the Secretary
determines appropriate; or
(B) in the case of any financial institution other than
one described in subparagraph (A), a warrant for common
or preferred stock, or a senior debt instrument from such
financial institution, as described in paragraph (2)(C).
(2) TERMS AND CONDITIONS.—The terms and conditions of
any warrant or senior debt instrument required under paragraph (1) shall meet the following requirements:
(A) PURPOSES.—Such terms and conditions shall, at
a minimum, be designed—
(i) to provide for reasonable participation by the
Secretary, for the benefit of taxpayers, in equity appreciation in the case of a warrant or other equity security,

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122 STAT. 3779

or a reasonable interest rate premium, in the case
of a debt instrument; and
(ii) to provide additional protection for the taxpayer
against losses from sale of assets by the Secretary
under this Act and the administrative expenses of the
TARP.
(B) AUTHORITY TO SELL, EXERCISE, OR SURRENDER.—
The Secretary may sell, exercise, or surrender a warrant
or any senior debt instrument received under this subsection, based on the conditions established under subparagraph (A).
(C) CONVERSION.—The warrant shall provide that if,
after the warrant is received by the Secretary under this
subsection, the financial institution that issued the warrant
is no longer listed or traded on a national securities
exchange or securities association, as described in paragraph (1)(A), such warrants shall convert to senior debt,
or contain appropriate protections for the Secretary to
ensure that the Treasury is appropriately compensated
for the value of the warrant, in an amount determined
by the Secretary.
(D) PROTECTIONS.—Any warrant representing securities to be received by the Secretary under this subsection
shall contain anti-dilution provisions of the type employed
in capital market transactions, as determined by the Secretary. Such provisions shall protect the value of the securities from market transactions such as stock splits, stock
distributions, dividends, and other distributions, mergers,
and other forms of reorganization or recapitalization.
(E) EXERCISE PRICE.—The exercise price for any warrant issued pursuant to this subsection shall be set by
the Secretary, in the interest of the taxpayers.
(F) SUFFICIENCY.—The financial institution shall guarantee to the Secretary that it has authorized shares of
nonvoting stock available to fulfill its obligations under
this subsection. Should the financial institution not have
sufficient authorized shares, including preferred shares
that may carry dividend rights equal to a multiple number
of common shares, the Secretary may, to the extent necessary, accept a senior debt note in an amount, and on
such terms as will compensate the Secretary with equivalent value, in the event that a sufficient shareholder vote
to authorize the necessary additional shares cannot be
obtained.
(3) EXCEPTIONS.—
(A) DE MINIMIS.—The Secretary shall establish de
minimis exceptions to the requirements of this subsection,
based on the size of the cumulative transactions of troubled
assets purchased from any one financial institution for
the duration of the program, at not more than
$100,000,000.
(B) OTHER EXCEPTIONS.—The Secretary shall establish
an exception to the requirements of this subsection and
appropriate alternative requirements for any participating
financial institution that is legally prohibited from issuing
securities and debt instruments, so as not to allow circumvention of the requirements of this section.

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PUBLIC LAW 110–343—OCT. 3, 2008

12 USC 5224.

SEC. 114. MARKET TRANSPARENCY.

Public
information.
Deadline.

(a) PRICING.—To facilitate market transparency, the Secretary
shall make available to the public, in electronic form, a description,
amounts, and pricing of assets acquired under this Act, within
2 business days of purchase, trade, or other disposition.
(b) DISCLOSURE.—For each type of financial institutions that
sells troubled assets to the Secretary under this Act, the Secretary
shall determine whether the public disclosure required for such
financial institutions with respect to off-balance sheet transactions,
derivatives instruments, contingent liabilities, and similar sources
of potential exposure is adequate to provide to the public sufficient
information as to the true financial position of the institutions.
If such disclosure is not adequate for that purpose, the Secretary
shall make recommendations for additional disclosure requirements
to the relevant regulators.

12 USC 5225.

SEC. 115. GRADUATED AUTHORIZATION TO PURCHASE.

Effective dates.

(a) AUTHORITY.—The authority of the Secretary to purchase
troubled assets under this Act shall be limited as follows:
(1) Effective upon the date of enactment of this Act, such
authority shall be limited to $250,000,000,000 outstanding at
any one time.
(2) If at any time, the President submits to the Congress
a written certification that the Secretary needs to exercise
the authority under this paragraph, effective upon such submission, such authority shall be limited to $350,000,000,000 outstanding at any one time.
(3) If, at any time after the certification in paragraph
(2) has been made, the President transmits to the Congress
a written report detailing the plan of the Secretary to exercise
the authority under this paragraph, unless there is enacted,
within 15 calendar days of such transmission, a joint resolution
described in subsection (c), effective upon the expiration of
such 15-day period, such authority shall be limited to
$700,000,000,000 outstanding at any one time.
(b) AGGREGATION OF PURCHASE PRICES.—The amount of troubled assets purchased by the Secretary outstanding at any one
time shall be determined for purposes of the dollar amount limitations under subsection (a) by aggregating the purchase prices of
all troubled assets held.
(c) JOINT RESOLUTION OF DISAPPROVAL.—
(1) IN GENERAL.—Notwithstanding any other provision of
this section, the Secretary may not exercise any authority to
make purchases under this Act with regard to any amount
in excess of $350,000,000,000 previously obligated, as described
in this section if, within 15 calendar days after the date on
which Congress receives a report of the plan of the Secretary
described in subsection (a)(3), there is enacted into law a joint
resolution disapproving the plan of the Secretary with respect
to such additional amount.
(2) CONTENTS OF JOINT RESOLUTION.—For the purpose of
this section, the term ‘‘joint resolution’’ means only a joint
resolution—
(A) that is introduced not later than 3 calendar days
after the date on which the report of the plan of the
Secretary referred to in subsection (a)(3) is received by
Congress;

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Definition.

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(B) which does not have a preamble;
(C) the title of which is as follows: ‘‘Joint resolution
relating to the disapproval of obligations under the Emergency Economic Stabilization Act of 2008’’; and
(D) the matter after the resolving clause of which
is as follows: ‘‘That Congress disapproves the obligation
of any amount exceeding the amounts obligated as
described in paragraphs (1) and (2) of section 115(a) of
the Emergency Economic Stabilization Act of 2008.’’.
(d) FAST TRACK CONSIDERATION IN HOUSE OF REPRESENTATIVES.—
(1) RECONVENING.—Upon receipt of a report under subsection (a)(3), the Speaker, if the House would otherwise be
adjourned, shall notify the Members of the House that, pursuant to this section, the House shall convene not later than
the second calendar day after receipt of such report;
(2) REPORTING AND DISCHARGE.—Any committee of the
House of Representatives to which a joint resolution is referred
shall report it to the House not later than 5 calendar days
after the date of receipt of the report described in subsection
(a)(3). If a committee fails to report the joint resolution within
that period, the committee shall be discharged from further
consideration of the joint resolution and the joint resolution
shall be referred to the appropriate calendar.
(3) PROCEEDING TO CONSIDERATION.—After each committee
authorized to consider a joint resolution reports it to the House
or has been discharged from its consideration, it shall be in
order, not later than the sixth day after Congress receives
the report described in subsection (a)(3), to move to proceed
to consider the joint resolution in the House. All points of
order against the motion are waived. Such a motion shall
not be in order after the House has disposed of a motion
to proceed on the joint resolution. The previous question shall
be considered as ordered on the motion to its adoption without
intervening motion. The motion shall not be debatable. A
motion to reconsider the vote by which the motion is disposed
of shall not be in order.
(4) CONSIDERATION.—The joint resolution shall be considered as read. All points of order against the joint resolution
and against its consideration are waived. The previous question
shall be considered as ordered on the joint resolution to its
passage without intervening motion except two hours of debate
equally divided and controlled by the proponent and an opponent. A motion to reconsider the vote on passage of the joint
resolution shall not be in order.
(e) FAST TRACK CONSIDERATION IN SENATE.—
(1) RECONVENING.—Upon receipt of a report under subsection (a)(3), if the Senate has adjourned or recessed for more
than 2 days, the majority leader of the Senate, after consultation with the minority leader of the Senate, shall notify the
Members of the Senate that, pursuant to this section, the
Senate shall convene not later than the second calendar day
after receipt of such message.
(2) PLACEMENT ON CALENDAR.—Upon introduction in the
Senate, the joint resolution shall be placed immediately on
the calendar.
(3) FLOOR CONSIDERATION.—

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Notification.
Deadline.

Deadline.

Waiver.

Notification.
Deadline.

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Duration.

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(A) IN GENERAL.—Notwithstanding Rule XXII of the
Standing Rules of the Senate, it is in order at any time
during the period beginning on the 4th day after the date
on which Congress receives a report of the plan of the
Secretary described in subsection (a)(3) and ending on the
6th day after the date on which Congress receives a report
of the plan of the Secretary described in subsection (a)(3)
(even though a previous motion to the same effect has
been disagreed to) to move to proceed to the consideration
of the joint resolution, and all points of order against
the joint resolution (and against consideration of the joint
resolution) are waived. The motion to proceed is not debatable. The motion is not subject to a motion to postpone.
A motion to reconsider the vote by which the motion is
agreed to or disagreed to shall not be in order. If a motion
to proceed to the consideration of the resolution is agreed
to, the joint resolution shall remain the unfinished business
until disposed of.
(B) DEBATE.—Debate on the joint resolution, and on
all debatable motions and appeals in connection therewith,
shall be limited to not more than 10 hours, which shall
be divided equally between the majority and minority
leaders or their designees. A motion further to limit debate
is in order and not debatable. An amendment to, or a
motion to postpone, or a motion to proceed to the consideration of other business, or a motion to recommit the joint
resolution is not in order.
(C) VOTE ON PASSAGE.—The vote on passage shall occur
immediately following the conclusion of the debate on a
joint resolution, and a single quorum call at the conclusion
of the debate if requested in accordance with the rules
of the Senate.
(D) RULINGS OF THE CHAIR ON PROCEDURE.—Appeals
from the decisions of the Chair relating to the application
of the rules of the Senate, as the case may be, to the
procedure relating to a joint resolution shall be decided
without debate.
(f) RULES RELATING TO SENATE AND HOUSE OF REPRESENTATIVES.—
(1) COORDINATION WITH ACTION BY OTHER HOUSE.—If,
before the passage by one House of a joint resolution of that
House, that House receives from the other House a joint resolution, then the following procedures shall apply:
(A) The joint resolution of the other House shall not
be referred to a committee.
(B) With respect to a joint resolution of the House
receiving the resolution—
(i) the procedure in that House shall be the same
as if no joint resolution had been received from the
other House; but
(ii) the vote on passage shall be on the joint resolution of the other House.
(2) TREATMENT OF JOINT RESOLUTION OF OTHER HOUSE.—
If one House fails to introduce or consider a joint resolution
under this section, the joint resolution of the other House
shall be entitled to expedited floor procedures under this section.

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(3) TREATMENT OF COMPANION MEASURES.—If, following
passage of the joint resolution in the Senate, the Senate then
receives the companion measure from the House of Representatives, the companion measure shall not be debatable.
(4) CONSIDERATION AFTER PASSAGE.—
(A) IN GENERAL.—If Congress passes a joint resolution,
the period beginning on the date the President is presented
with the joint resolution and ending on the date the President takes action with respect to the joint resolution shall
be disregarded in computing the 15-calendar day period
described in subsection (a)(3).
(B) VETOES.—If the President vetoes the joint resolution—
(i) the period beginning on the date the President
vetoes the joint resolution and ending on the date
the Congress receives the veto message with respect
to the joint resolution shall be disregarded in computing the 15-calendar day period described in subsection (a)(3), and
(ii) debate on a veto message in the Senate under
this section shall be 1 hour equally divided between
the majority and minority leaders or their designees.
(5) RULES OF HOUSE OF REPRESENTATIVES AND SENATE.—
This subsection and subsections (c), (d), and (e) are enacted
by Congress—
(A) as an exercise of the rulemaking power of the
Senate and House of Representatives, respectively, and
as such it is deemed a part of the rules of each House,
respectively, but applicable only with respect to the procedure to be followed in that House in the case of a joint
resolution, and it supersedes other rules only to the extent
that it is inconsistent with such rules; and
(B) with full recognition of the constitutional right
of either House to change the rules (so far as relating
to the procedure of that House) at any time, in the same
manner, and to the same extent as in the case of any
other rule of that House.

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SEC. 116. OVERSIGHT AND AUDITS.

Debate.
Duration.

12 USC 5226.

(a) COMPTROLLER GENERAL OVERSIGHT.—
(1) SCOPE OF OVERSIGHT.—The Comptroller General of the
United States shall, upon establishment of the troubled assets
relief program under this Act (in this section referred to as
the ‘‘TARP’’), commence ongoing oversight of the activities and
performance of the TARP and of any agents and representatives
of the TARP (as related to the agent or representative’s activities on behalf of or under the authority of the TARP), including
vehicles established by the Secretary under this Act. The subjects of such oversight shall include the following:
(A) The performance of the TARP in meeting the purposes of this Act, particularly those involving—
(i) foreclosure mitigation;
(ii) cost reduction;
(iii) whether it has provided stability or prevented
disruption to the financial markets or the banking
system; and
(iv) whether it has protected taxpayers.

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Federal buildings
and facilities.

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(B) The financial condition and internal controls of
the TARP, its representatives and agents.
(C) Characteristics of transactions and commitments
entered into, including transaction type, frequency, size,
prices paid, and all other relevant terms and conditions,
and the timing, duration and terms of any future commitments to purchase assets.
(D) Characteristics and disposition of acquired assets,
including type, acquisition price, current market value,
sale prices and terms, and use of proceeds from sales.
(E) Efficiency of the operations of the TARP in the
use of appropriated funds.
(F) Compliance with all applicable laws and regulations
by the TARP, its agents and representatives.
(G) The efforts of the TARP to prevent, identify, and
minimize conflicts of interest involving any agent or representative performing activities on behalf of or under the
authority of the TARP.
(H) The efficacy of contracting procedures pursuant
to section 107(b), including, as applicable, the efforts of
the TARP in evaluating proposals for inclusion and contracting to the maximum extent possible of minorities (as
such term is defined in 1204(c) of the Financial Institutions
Reform, Recovery, and Enhancement Act of 1989 (12 U.S.C.
1811 note), women, and minority- and women-owned
businesses, including ascertaining and reporting the total
amount of fees paid and other value delivered by the TARP
to all of its agents and representatives, and such amounts
paid or delivered to such firms that are minority- and
women-owned businesses (as such terms are defined in
section 21A of the Federal Home Loan Bank Act (12 U.S.C.
1441a)).
(2) CONDUCT AND ADMINISTRATION OF OVERSIGHT.—
(A) GAO PRESENCE.—The Secretary shall provide the
Comptroller General with appropriate space and facilities
in the Department of the Treasury as necessary to facilitate
oversight of the TARP until the termination date established in section 120.
(B) ACCESS TO RECORDS.—To the extent otherwise consistent with law, the Comptroller General shall have access,
upon request, to any information, data, schedules, books,
accounts, financial records, reports, files, electronic communications, or other papers, things, or property belonging
to or in use by the TARP, or any vehicles established
by the Secretary under this Act, and to the officers, directors, employees, independent public accountants, financial
advisors, and other agents and representatives of the TARP
(as related to the agent or representative’s activities on
behalf of or under the authority of the TARP) or any
such vehicle at such reasonable time as the Comptroller
General may request. The Comptroller General shall be
afforded full facilities for verifying transactions with the
balances or securities held by depositaries, fiscal agents,
and custodians. The Comptroller General may make and
retain copies of such books, accounts, and other records
as the Comptroller General deems appropriate.

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122 STAT. 3785

(C) REIMBURSEMENT OF COSTS.—The Treasury shall
reimburse the Government Accountability Office for the
full cost of any such oversight activities as billed therefor
by the Comptroller General of the United States. Such
reimbursements shall be credited to the appropriation
account ‘‘Salaries and Expenses, Government Accountability Office’’ current when the payment is received and
remain available until expended.
(3) REPORTING.—The Comptroller General shall submit
reports of findings under this section, regularly and no less
frequently than once every 60 days, to the appropriate committees of Congress, and the Special Inspector General for the
Troubled Asset Relief Program established under this Act on
the activities and performance of the TARP. The Comptroller
may also submit special reports under this subsection as warranted by the findings of its oversight activities.
(b) COMPTROLLER GENERAL AUDITS.—
(1) ANNUAL AUDIT.—The TARP shall annually prepare and
issue to the appropriate committees of Congress and the public
audited financial statements prepared in accordance with generally accepted accounting principles, and the Comptroller General shall annually audit such statements in accordance with
generally accepted auditing standards. The Treasury shall
reimburse the Government Accountability Office for the full
cost of any such audit as billed therefor by the Comptroller
General. Such reimbursements shall be credited to the appropriation account ‘‘Salaries and Expenses, Government Accountability Office’’ current when the payment is received and remain
available until expended. The financial statements prepared
under this paragraph shall be on the fiscal year basis prescribed
under section 1102 of title 31, United States Code.
(2) AUTHORITY.—The Comptroller General may audit the
programs, activities, receipts, expenditures, and financial transactions of the TARP and any agents and representatives of
the TARP (as related to the agent or representative’s activities
on behalf of or under the authority of the TARP), including
vehicles established by the Secretary under this Act.
(3) CORRECTIVE RESPONSES TO AUDIT PROBLEMS.—The
TARP shall—
(A) take action to address deficiencies identified by
the Comptroller General or other auditor engaged by the
TARP; or
(B) certify to appropriate committees of Congress that
no action is necessary or appropriate.
(c) INTERNAL CONTROL.—
(1) ESTABLISHMENT.—The TARP shall establish and maintain an effective system of internal control, consistent with
the standards prescribed under section 3512(c) of title 31,
United States Code, that provides reasonable assurance of—
(A) the effectiveness and efficiency of operations,
including the use of the resources of the TARP;
(B) the reliability of financial reporting, including
financial statements and other reports for internal and
external use; and
(C) compliance with applicable laws and regulations.
(2) REPORTING.—In conjunction with each annual financial
statement issued under this section, the TARP shall—

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information.

Certification.

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(A) state the responsibility of management for establishing and maintaining adequate internal control over
financial reporting; and
(B) state its assessment, as of the end of the most
recent year covered by such financial statement of the
TARP, of the effectiveness of the internal control over
financial reporting.
(d) SHARING OF INFORMATION.—Any report or audit required
under this section shall also be submitted to the Congressional
Oversight Panel established under section 125.
(e) TERMINATION.—Any oversight, reporting, or audit requirement under this section shall terminate on the later of—
(1) the date that the last troubled asset acquired by the
Secretary under section 101 has been sold or transferred out
of the ownership or control of the Federal Government; or
(2) the date of expiration of the last insurance contract
issued under section 102.

Reports.
Audits.

12 USC 5227.

SEC. 117. STUDY AND REPORT ON MARGIN AUTHORITY.

(a) STUDY.—The Comptroller General shall undertake a study
to determine the extent to which leverage and sudden deleveraging
of financial institutions was a factor behind the current financial
crisis.
(b) CONTENT.—The study required by this section shall
include—
(1) an analysis of the roles and responsibilities of the
Board, the Securities and Exchange Commission, the Secretary,
and other Federal banking agencies with respect to monitoring
leverage and acting to curtail excessive leveraging;
(2) an analysis of the authority of the Board to regulate
leverage, including by setting margin requirements, and what
process the Board used to decide whether or not to use its
authority;
(3) an analysis of any usage of the margin authority by
the Board; and
(4) recommendations for the Board and appropriate
committees of Congress with respect to the existing authority
of the Board.
(c) REPORT.—Not later than June 1, 2009, the Comptroller
General shall complete and submit a report on the study required
by this section to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives.
(d) SHARING OF INFORMATION.—Any reports required under
this section shall also be submitted to the Congressional Oversight
Panel established under section 125.

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12 USC 5228.

SEC. 118. FUNDING.

For the purpose of the authorities granted in this Act, and
for the costs of administering those authorities, the Secretary may
use the proceeds of the sale of any securities issued under chapter
31 of title 31, United States Code, and the purposes for which
securities may be issued under chapter 31 of title 31, United States
Code, are extended to include actions authorized by this Act,
including the payment of administrative expenses. Any funds
expended or obligated by the Secretary for actions authorized by
this Act, including the payment of administrative expenses, shall

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be deemed appropriated at the time of such expenditure or obligation.

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SEC. 119. JUDICIAL REVIEW AND RELATED MATTERS.

12 USC 5229.

(a) JUDICIAL REVIEW.—
(1) STANDARD.—Actions by the Secretary pursuant to the
authority of this Act shall be subject to chapter 7 of title
5, United States Code, including that such final actions shall
be held unlawful and set aside if found to be arbitrary, capricious, an abuse of discretion, or not in accordance with law.
(2) LIMITATIONS ON EQUITABLE RELIEF.—
(A) INJUNCTION.—No injunction or other form of equitable relief shall be issued against the Secretary for actions
pursuant to section 101, 102, 106, and 109, other than
to remedy a violation of the Constitution.
(B) TEMPORARY RESTRAINING ORDER.—Any request for
a temporary restraining order against the Secretary for
actions pursuant to this Act shall be considered and
granted or denied by the court within 3 days of the date
of the request.
(C) PRELIMINARY INJUNCTION.—Any request for a
preliminary injunction against the Secretary for actions
pursuant to this Act shall be considered and granted or
denied by the court on an expedited basis consistent with
the provisions of rule 65(b)(3) of the Federal Rules of Civil
Procedure, or any successor thereto.
(D) PERMANENT INJUNCTION.—Any request for a
permanent injunction against the Secretary for actions
pursuant to this Act shall be considered and granted or
denied by the court on an expedited basis. Whenever possible, the court shall consolidate trial on the merits with
any hearing on a request for a preliminary injunction,
consistent with the provisions of rule 65(a)(2) of the Federal
Rules of Civil Procedure, or any successor thereto.
(3) LIMITATION ON ACTIONS BY PARTICIPATING COMPANIES.—
No action or claims may be brought against the Secretary
by any person that divests its assets with respect to its participation in a program under this Act, except as provided in
paragraph (1), other than as expressly provided in a written
contract with the Secretary.
(4) STAYS.—Any injunction or other form of equitable relief
issued against the Secretary for actions pursuant to section
101, 102, 106, and 109, shall be automatically stayed. The
stay shall be lifted unless the Secretary seeks a stay from
a higher court within 3 calendar days after the date on which
the relief is issued.
(b) RELATED MATTERS.—
(1) TREATMENT OF HOMEOWNERS’ RIGHTS.—The terms of
any residential mortgage loan that is part of any purchase
by the Secretary under this Act shall remain subject to all
claims and defenses that would otherwise apply, notwithstanding the exercise of authority by the Secretary under this
Act.
(2) SAVINGS CLAUSE.—Any exercise of the authority of the
Secretary pursuant to this Act shall not impair the claims
or defenses that would otherwise apply with respect to persons
other than the Secretary. Except as established in any contract,

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Deadline.

Contracts.

Deadline.

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PUBLIC LAW 110–343—OCT. 3, 2008
a servicer of pooled residential mortgages owes any duty to
determine whether the net present value of the payments on
the loan, as modified, is likely to be greater than the anticipated
net recovery that would result from foreclosure to all investors
and holders of beneficial interests in such investment, but
not to any individual or groups of investors or beneficial interest
holders, and shall be deemed to act in the best interests of
all such investors or holders of beneficial interests if the servicer
agrees to or implements a modification or workout plan when
the servicer takes reasonable loss mitigation actions, including
partial payments.

12 USC 5230.

SEC. 120. TERMINATION OF AUTHORITY.

(a) TERMINATION.—The authorities provided under sections
101(a), excluding section 101(a)(3), and 102 shall terminate on
December 31, 2009.
(b) EXTENSION UPON CERTIFICATION.—The Secretary, upon
submission of a written certification to Congress, may extend the
authority provided under this Act to expire not later than 2 years
from the date of enactment of this Act. Such certification shall
include a justification of why the extension is necessary to assist
American families and stabilize financial markets, as well as the
expected cost to the taxpayers for such an extension.
12 USC 5231.

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President.

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SEC. 121. SPECIAL INSPECTOR GENERAL FOR THE TROUBLED ASSET
RELIEF PROGRAM.

(a) OFFICE OF INSPECTOR GENERAL.—There is hereby established the Office of the Special Inspector General for the Troubled
Asset Relief Program.
(b) APPOINTMENT OF INSPECTOR GENERAL; REMOVAL.—(1) The
head of the Office of the Special Inspector General for the Troubled
Asset Relief Program is the Special Inspector General for the Troubled Asset Relief Program (in this section referred to as the ‘‘Special
Inspector General’’), who shall be appointed by the President, by
and with the advice and consent of the Senate.
(2) The appointment of the Special Inspector General shall
be made on the basis of integrity and demonstrated ability in
accounting, auditing, financial analysis, law, management analysis,
public administration, or investigations.
(3) The nomination of an individual as Special Inspector General shall be made as soon as practicable after the establishment
of any program under sections 101 and 102.
(4) The Special Inspector General shall be removable from
office in accordance with the provisions of section 3(b) of the
Inspector General Act of 1978 (5 U.S.C. App.).
(5) For purposes of section 7324 of title 5, United States Code,
the Special Inspector General shall not be considered an employee
who determines policies to be pursued by the United States in
the nationwide administration of Federal law.
(6) The annual rate of basic pay of the Special Inspector General
shall be the annual rate of basic pay for an Inspector General
under section 3(e) of the Inspector General Act of 1978 (5 U.S.C.
App.).
(c) DUTIES.—(1) It shall be the duty of the Special Inspector
General to conduct, supervise, and coordinate audits and investigations of the purchase, management, and sale of assets by the
Secretary of the Treasury under any program established by the
Secretary under section 101, and the management by the Secretary

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122 STAT. 3789

of any program established under section 102, including by collecting and summarizing the following information:
(A) A description of the categories of troubled assets purchased or otherwise procured by the Secretary.
(B) A listing of the troubled assets purchased in each
such category described under subparagraph (A).
(C) An explanation of the reasons the Secretary deemed
it necessary to purchase each such troubled asset.
(D) A listing of each financial institution that such troubled
assets were purchased from.
(E) A listing of and detailed biographical information on
each person or entity hired to manage such troubled assets.
(F) A current estimate of the total amount of troubled
assets purchased pursuant to any program established under
section 101, the amount of troubled assets on the books of
the Treasury, the amount of troubled assets sold, and the
profit and loss incurred on each sale or disposition of each
such troubled asset.
(G) A listing of the insurance contracts issued under section
102.
(2) The Special Inspector General shall establish, maintain,
and oversee such systems, procedures, and controls as the Special
Inspector General considers appropriate to discharge the duty under
paragraph (1).
(3) In addition to the duties specified in paragraphs (1) and
(2), the Inspector General shall also have the duties and responsibilities of inspectors general under the Inspector General Act of 1978.
(d) POWERS AND AUTHORITIES.—(1) In carrying out the duties
specified in subsection (c), the Special Inspector General shall have
the authorities provided in section 6 of the Inspector General Act
of 1978.
(2) The Special Inspector General shall carry out the duties
specified in subsection (c)(1) in accordance with section 4(b)(1) of
the Inspector General Act of 1978.
(e) PERSONNEL, FACILITIES, AND OTHER RESOURCES.—(1) The
Special Inspector General may select, appoint, and employ such
officers and employees as may be necessary for carrying out the
duties of the Special Inspector General, subject to the provisions
of title 5, United States Code, governing appointments in the
competitive service, and the provisions of chapter 51 and subchapter
III of chapter 53 of such title, relating to classification and General
Schedule pay rates.
(2) The Special Inspector General may obtain services as
authorized by section 3109 of title 5, United States Code, at daily
rates not to exceed the equivalent rate prescribed for grade GS–
15 of the General Schedule by section 5332 of such title.
(3) The Special Inspector General may enter into 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 Inspector General.
(4)(A) Upon request of the Special Inspector General for
information or assistance from any department, 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 Special Inspector
General, or an authorized designee.

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(B) Whenever information or assistance requested by the Special Inspector General is, in the judgment of the Special Inspector
General, unreasonably refused or not provided, the Special Inspector
General shall report the circumstances to the appropriate committees of Congress without delay.
(f) REPORTS.—(1) Not later than 60 days after the confirmation
of the Special Inspector General, and every calendar quarter thereafter, the Special Inspector General shall submit to the appropriate
committees of Congress a report summarizing the activities of the
Special Inspector General during the 120-day period ending on
the date of such report. Each report shall include, for the period
covered by such report, a detailed statement of all purchases, obligations, expenditures, and revenues associated with any program
established by the Secretary of the Treasury under sections 101
and 102, as well as the information collected under subsection
(c)(1).
(2) Nothing in this subsection shall be construed to authorize
the public disclosure of information that is—
(A) specifically prohibited from disclosure by any other
provision of law;
(B) specifically required by Executive order to be protected
from disclosure in the interest of national defense or national
security or in the conduct of foreign affairs; or
(C) a part of an ongoing criminal investigation.
(3) Any reports required under this section shall also be submitted to the Congressional Oversight Panel established under
section 125.
(g) FUNDING.—(1) Of the amounts made available to the Secretary of the Treasury under section 118, $50,000,000 shall be
available to the Special Inspector General to carry out this section.
(2) The amount available under paragraph (1) shall remain
available until expended.
(h) TERMINATION.—The Office of the Special Inspector General
shall terminate on the later of—
(1) the date that the last troubled asset acquired by the
Secretary under section 101 has been sold or transferred out
of the ownership or control of the Federal Government; or
(2) the date of expiration of the last insurance contract
issued under section 102.

Reports.

Reports.

SEC. 122. INCREASE IN STATUTORY LIMIT ON THE PUBLIC DEBT.

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 ‘‘$11,315,000,000,000’’.

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12 USC 5232.

SEC. 123. CREDIT REFORM.

(a) IN GENERAL.—Subject to subsection (b), the costs of purchases of troubled assets made under section 101(a) and guarantees
of troubled assets under section 102, and any cash flows associated
with the activities authorized in section 102 and subsections (a),
(b), and (c) of section 106 shall be determined as provided under
the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et. seq.).
(b) COSTS.—For the purposes of section 502(5) of the Federal
Credit Reform Act of 1990 (2 U.S.C. 661a(5))—
(1) the cost of troubled assets and guarantees of troubled
assets shall be calculated by adjusting the discount rate in
section 502(5)(E) (2 U.S.C. 661a(5)(E)) for market risks; and

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(2) the cost of a modification of a troubled asset or guarantee of a troubled asset shall be the difference between the
current estimate consistent with paragraph (1) under the terms
of the troubled asset or guarantee of the troubled asset and
the current estimate consistent with paragraph (1) under the
terms of the troubled asset or guarantee of the troubled asset,
as modified.
SEC. 124. HOPE FOR HOMEOWNERS AMENDMENTS.

Section 257 of the National Housing Act (12 U.S.C. 1715z–
23) is amended—
(1) in subsection (e)—
(A) in paragraph (1)(B), by inserting before ‘‘a ratio’’
the following: ‘‘, or thereafter is likely to have, due to
the terms of the mortgage being reset,’’;
(B) in paragraph (2)(B), by inserting before the period
at the end ‘‘(or such higher percentage as the Board determines, in the discretion of the Board)’’;
(C) in paragraph (4)(A)—
(i) in the first sentence, by inserting after ‘‘insured
loan’’ the following: ‘‘and any payments made under
this paragraph,’’; and
(ii) by adding at the end the following: ‘‘Such
actions may include making payments, which shall
be accepted as payment in full of all indebtedness
under the eligible mortgage, to any holder of an
existing subordinate mortgage, in lieu of any future
appreciation payments authorized under subparagraph
(B).’’; and
(2) in subsection (w), by inserting after ‘‘administrative
costs’’ the following: ‘‘and payments pursuant to subsection
(e)(4)(A)’’.

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SEC. 125. CONGRESSIONAL OVERSIGHT PANEL.

12 USC 5233.

(a) ESTABLISHMENT.—There is hereby established the Congressional Oversight Panel (hereafter in this section referred to as
the ‘‘Oversight Panel’’) as an establishment in the legislative branch.
(b) DUTIES.—The Oversight Panel shall review the current state
of the financial markets and the regulatory system and submit
the following reports to Congress:
(1) REGULAR REPORTS.—
(A) IN GENERAL.—Regular reports of the Oversight
Panel shall include the following:
(i) The use by the Secretary of authority under
this Act, including with respect to the use of contracting authority and administration of the program.
(ii) The impact of purchases made under the Act
on the financial markets and financial institutions.
(iii) The extent to which the information made
available on transactions under the program has
contributed to market transparency.
(iv) The effectiveness of foreclosure mitigation
efforts, and the effectiveness of the program from the
standpoint of minimizing long-term costs to the taxpayers and maximizing the benefits for taxpayers.
(B) TIMING.—The reports required under this paragraph shall be submitted not later than 30 days after

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the first exercise by the Secretary of the authority under
section 101(a) or 102, and every 30 days thereafter.
(2) SPECIAL REPORT ON REGULATORY REFORM.—The Oversight Panel shall submit a special report on regulatory reform
not later than January 20, 2009, analyzing the current state
of the regulatory system and its effectiveness at overseeing
the participants in the financial system and protecting consumers, and providing recommendations for improvement,
including recommendations regarding whether any participants
in the financial markets that are currently outside the regulatory system should become subject to the regulatory system,
the rationale underlying such recommendation, and whether
there are any gaps in existing consumer protections.
(c) MEMBERSHIP.—
(1) IN GENERAL.—The Oversight Panel shall consist of 5
members, as follows:
(A) 1 member appointed by the Speaker of the House
of Representatives.
(B) 1 member appointed by the minority leader of
the House of Representatives.
(C) 1 member appointed by the majority leader of
the Senate.
(D) 1 member appointed by the minority leader of
the Senate.
(E) 1 member appointed by the Speaker of the House
of Representatives and the majority leader of the Senate,
after consultation with the minority leader of the Senate
and the minority leader of the House of Representatives.
(2) PAY.—Each member of the Oversight Panel shall each
be paid at a rate equal to the daily equivalent of the annual
rate of basic pay for level I of the Executive Schedule for
each day (including travel time) during which such member
is engaged in the actual performance of duties vested in the
Commission.
(3) PROHIBITION OF COMPENSATION OF FEDERAL
EMPLOYEES.—Members of the Oversight Panel who are fulltime officers or employees of the United States or Members
of Congress may not receive additional pay, allowances, or
benefits by reason of their service on the Oversight Panel.
(4) TRAVEL EXPENSES.—Each member shall receive travel
expenses, including per diem in lieu of subsistence, in accordance with applicable provisions under subchapter I of chapter
57 of title 5, United States Code.
(5) QUORUM.—Four members of the Oversight Panel shall
constitute a quorum but a lesser number may hold hearings.
(6) VACANCIES.—A vacancy on the Oversight Panel shall
be filled in the manner in which the original appointment
was made.
(7) MEETINGS.—The Oversight Panel shall meet at the
call of the Chairperson or a majority of its members.
(d) STAFF.—
(1) IN GENERAL.—The Oversight Panel may appoint and
fix the pay of any personnel as the Commission considers
appropriate.
(2) EXPERTS AND CONSULTANTS.—The Oversight Panel may
procure temporary and intermittent services under section
3109(b) of title 5, United States Code.

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(3) STAFF OF AGENCIES.—Upon request of the Oversight
Panel, the head of any Federal department or agency may
detail, on a reimbursable basis, any of the personnel of that
department or agency to the Oversight Panel to assist it in
carrying out its duties under this Act.
(e) POWERS.—
(1) HEARINGS AND SESSIONS.—The Oversight Panel may,
for the purpose of carrying out this section, hold hearings,
sit and act at times and places, take testimony, and receive
evidence as the Panel considers appropriate and may administer oaths or affirmations to witnesses appearing before it.
(2) POWERS OF MEMBERS AND AGENTS.—Any member or
agent of the Oversight Panel may, if authorized by the Oversight Panel, take any action which the Oversight Panel is
authorized to take by this section.
(3) OBTAINING OFFICIAL DATA.—The Oversight Panel may
secure directly from any department or agency of the United
States information necessary to enable it to carry out this
section. Upon request of the Chairperson of the Oversight
Panel, the head of that department or agency shall furnish
that information to the Oversight Panel.
(4) REPORTS.—The Oversight Panel shall receive and consider all reports required to be submitted to the Oversight
Panel under this Act.
(f) TERMINATION.—The Oversight Panel shall terminate 6
months after the termination date specified in section 120.
(g) FUNDING FOR EXPENSES.—
(1) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to be appropriated to the Oversight Panel such sums
as may be necessary for any fiscal year, half of which shall
be derived from the applicable account of the House of Representatives, and half of which shall be derived from the contingent fund of the Senate.
(2) REIMBURSEMENT OF AMOUNTS.—An amount equal to
the expenses of the Oversight Panel shall be promptly transferred by the Secretary, from time to time upon the presentment
of a statement of such expenses by the Chairperson of the
Oversight Panel, from funds made available to the Secretary
under this Act to the applicable fund of the House of Representatives and the contingent fund of the Senate, as appropriate,
as reimbursement for amounts expended from such account
and fund under paragraph (1).

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SEC. 126. FDIC AUTHORITY.

(a) IN GENERAL.—Section 18(a) of the Federal Deposit Insurance
Act (12 U.S.C. 1828(a)) is amended by adding at the end the
following new paragraph:
‘‘(4) FALSE ADVERTISING, MISUSE OF FDIC NAMES, AND MISREPRESENTATION TO INDICATE INSURED STATUS.—
‘‘(A) PROHIBITION ON FALSE ADVERTISING AND MISUSE
OF FDIC NAMES.—No person may represent or imply that
any deposit liability, obligation, certificate, or share is
insured or guaranteed by the Corporation, if such deposit
liability, obligation, certificate, or share is not insured or
guaranteed by the Corporation—

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122 STAT. 3794

‘‘(i) by using the terms ‘Federal Deposit’, ‘Federal
Deposit Insurance’, ‘Federal Deposit Insurance Corporation’, any combination of such terms, or the abbreviation ‘FDIC’ as part of the business name or firm
name of any person, including any corporation, partnership, business trust, association, or other business
entity; or
‘‘(ii) by using such terms or any other terms, sign,
or symbol as part of an advertisement, solicitation,
or other document.
‘‘(B) PROHIBITION ON MISREPRESENTATIONS OF INSURED
STATUS.—No person may knowingly misrepresent—
‘‘(i) that any deposit liability, obligation, certificate,
or share is insured, under this Act, if such deposit
liability, obligation, certificate, or share is not so
insured; or
‘‘(ii) the extent to which or the manner in which
any deposit liability, obligation, certificate, or share
is insured under this Act, if such deposit liability,
obligation, certificate, or share is not so insured, to
the extent or in the manner represented.
‘‘(C) AUTHORITY OF THE APPROPRIATE FEDERAL BANKING
AGENCY.—The appropriate Federal banking agency shall
have enforcement authority in the case of a violation of
this paragraph by any person for which the agency is
the appropriate Federal banking agency, or any institutionaffiliated party thereof.
‘‘(D) CORPORATION AUTHORITY IF THE APPROPRIATE FEDERAL BANKING AGENCY FAILS TO FOLLOW RECOMMENDATION.—
‘‘(i) RECOMMENDATION.—The Corporation may recommend in writing to the appropriate Federal banking
agency that the agency take any enforcement action
authorized under section 8 for purposes of enforcement
of this paragraph with respect to any person for which
the agency is the appropriate Federal banking agency
or any institution-affiliated party thereof.
‘‘(ii) AGENCY RESPONSE.—If the appropriate Federal banking agency does not, within 30 days of the
date of receipt of a recommendation under clause (i),
take the enforcement action with respect to this paragraph recommended by the Corporation or provide a
plan acceptable to the Corporation for responding to
the situation presented, the Corporation may take the
recommended enforcement action against such person
or institution-affiliated party.
‘‘(E) ADDITIONAL AUTHORITY.—In addition to its
authority under subparagraphs (C) and (D), for purposes
of this paragraph, the Corporation shall have, in the same
manner and to the same extent as with respect to a State
nonmember insured bank—
‘‘(i) jurisdiction over—
‘‘(I) any person other than a person for which
another agency is the appropriate Federal banking
agency or any institution-affiliated party thereof;
and

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Deadline.

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3795

‘‘(II) any person that aids or abets a violation
of this paragraph by a person described in subclause (I); and
‘‘(ii) for purposes of enforcing the requirements
of this paragraph, the authority of the Corporation
under—
‘‘(I) section 10(c) to conduct investigations; and
‘‘(II) subsections (b), (c), (d) and (i) of section
8 to conduct enforcement actions.
‘‘(F) OTHER ACTIONS PRESERVED.—No provision of this
paragraph shall be construed as barring any action otherwise available, under the laws of the United States or
any State, to any Federal or State agency or individual.’’.
(b) ENFORCEMENT ORDERS.—Section 8(c) of the Federal Deposit
Insurance Act (12 U.S.C. 1818(c)) is amended by adding at the
end the following new paragraph:
‘‘(4) FALSE ADVERTISING OR MISUSE OF NAMES TO INDICATE
INSURED STATUS.—
‘‘(A) TEMPORARY ORDER.—
‘‘(i) IN GENERAL.—If a notice of charges served
under subsection (b)(1) specifies on the basis of particular facts that any person engaged or is engaging
in conduct described in section 18(a)(4), the Corporation or other appropriate Federal banking agency may
issue a temporary order requiring—
‘‘(I) the immediate cessation of any activity
or practice described, which gave rise to the notice
of charges; and
‘‘(II) affirmative action to prevent any further,
or to remedy any existing, violation.
‘‘(ii) EFFECT OF ORDER.—Any temporary order
issued under this subparagraph shall take effect upon
service.
‘‘(B) EFFECTIVE PERIOD OF TEMPORARY ORDER.—A temporary order issued under subparagraph (A) shall remain
effective and enforceable, pending the completion of an
administrative proceeding pursuant to subsection (b)(1) in
connection with the notice of charges—
‘‘(i) until such time as the Corporation or other
appropriate Federal banking agency dismisses the
charges specified in such notice; or
‘‘(ii) if a cease-and-desist order is issued against
such person, until the effective date of such order.
‘‘(C) CIVIL MONEY PENALTIES.—Any violation of section
18(a)(4) shall be subject to civil money penalties, as set
forth in subsection (i), except that for any person other
than an insured depository institution or an institutionaffiliated party that is found to have violated this paragraph, the Corporation or other appropriate Federal
banking agency shall not be required to demonstrate any
loss to an insured depository institution.’’.
(c) UNENFORCEABILITY OF CERTAIN AGREEMENTS.—Section 13(c)
of the Federal Deposit Insurance Act (12 U.S.C. 1823(c)) is amended
by adding at the end the following new paragraph:
‘‘(11) UNENFORCEABILITY OF CERTAIN AGREEMENTS.—No
provision contained in any existing or future standstill, confidentiality, or other agreement that, directly or indirectly—

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122 STAT. 3796

PUBLIC LAW 110–343—OCT. 3, 2008

‘‘(A) affects, restricts, or limits the ability of any person
to offer to acquire or acquire,
‘‘(B) prohibits any person from offering to acquire or
acquiring, or
‘‘(C) prohibits any person from using any previously
disclosed information in connection with any such offer
to acquire or acquisition of,
all or part of any insured depository institution, including any
liabilities, assets, or interest therein, in connection with any
transaction in which the Corporation exercises its authority
under section 11 or 13, shall be enforceable against or impose
any liability on such person, as such enforcement or liability
shall be contrary to public policy.’’.
(d) TECHNICAL AND CONFORMING AMENDMENTS.—Section 18 of
the Federal Deposit Insurance Act (12 U.S.C. 1828) is amended—
(1) in subsection (a)(3)—
(A) by striking ‘‘this subsection’’ the first place that
term appears and inserting ‘‘paragraph (1)’’; and
(B) by striking ‘‘this subsection’’ the second place that
term appears and inserting ‘‘paragraph (2)’’; and
(2) in the heading for subsection (a), by striking ‘‘INSURANCE
LOGO.—’’ and inserting ‘‘REPRESENTATIONS OF DEPOSIT INSURANCE.—’’.
12 USC 5234.

SEC. 127. COOPERATION WITH THE FBI.

Any Federal financial regulatory agency shall cooperate with
the Federal Bureau of Investigation and other law enforcement
agencies investigating fraud, misrepresentation, and malfeasance
with respect to development, advertising, and sale of financial products.
SEC. 128. ACCELERATION OF EFFECTIVE DATE.

Section 203 of the Financial Services Regulatory Relief Act
of 2006 (12 U.S.C. 461 note) is amended by striking ‘‘October
1, 2011’’ and inserting ‘‘October 1, 2008’’.

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SEC. 129. DISCLOSURES ON EXERCISE OF LOAN AUTHORITY.

Reports.
Deadline.

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12 USC 5235.

(a) IN GENERAL.—Not later than 7 days after the date on
which the Board exercises its authority under the third paragraph
of section 13 of the Federal Reserve Act (12 U.S.C. 343; relating
to discounts for individuals, partnerships, and corporations) the
Board shall provide to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report which includes—
(1) the justification for exercising the authority; and
(2) the specific terms of the actions of the Board, including
the size and duration of the lending, available information
concerning the value of any collateral held with respect to
such a loan, the recipient of warrants or any other potential
equity in exchange for the loan, and any expected cost to
the taxpayers for such exercise.
(b) PERIODIC UPDATES.—The Board shall provide updates to
the Committees specified in subsection (a) not less frequently than
once every 60 days while the subject loan is outstanding, including—
(1) the status of the loan;
(2) the value of the collateral held by the Federal reserve
bank which initiated the loan; and
(3) the projected cost to the taxpayers of the loan.

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3797

(c) CONFIDENTIALITY.—The information submitted to the Congress under this section shall be kept confidential, upon the written
request of the Chairman of the Board, in which case it shall be
made available only to the Chairpersons and Ranking Members
of the Committees described in subsection (a).
(d) APPLICABILITY.—The provisions of this section shall be in
force for all uses of the authority provided under section 13 of
the Federal Reserve Act occurring during the period beginning
on March 1, 2008 and ending on the after the date of enactment
of this Act, and reports described in subsection (a) shall be required
beginning not later than 30 days after that date of enactment,
with respect to any such exercise of authority.
(e) SHARING OF INFORMATION.—Any reports required under this
section shall also be submitted to the Congressional Oversight
Panel established under section 125.

Effective date.
Termination
date.
Reports.
Deadline.

Reports.

SEC. 130. TECHNICAL CORRECTIONS.

(a) IN GENERAL.—Section 128(b)(2) of the Truth in Lending
Act (15 U.S.C. 1638(b)(2)), as amended by section 2502 of the
Mortgage Disclosure Improvement Act of 2008 (Public Law 110–
289), is amended—
(1) in subparagraph (A), by striking ‘‘In the case’’ and
inserting ‘‘Except as provided in subparagraph (G), in the case’’;
and
(2) by amending subparagraph (G) to read as follows:
‘‘(G)(i) In the case of an extension of credit relating
to a plan described in section 101(53D) of title 11, United
States Code—
‘‘(I) the requirements of subparagraphs (A) through
(E) shall not apply; and
‘‘(II) a good faith estimate of the disclosures
required under subsection (a) shall be made in accordance with regulations of the Board under section 121(c)
before such credit is extended, or shall be delivered
or placed in the mail not later than 3 business days
after the date on which the creditor receives the written application of the consumer for such credit, whichever is earlier.
‘‘(ii) If a disclosure statement furnished within 3 business days of the written application (as provided under
clause (i)(II)) contains an annual percentage rate which
is subsequently rendered inaccurate, within the meaning
of section 107(c), the creditor shall furnish another disclosure statement at the time of settlement or consummation
of the transaction.’’.
(b) EFFECTIVE DATE.—The amendments made by subsection
(a) shall take effect as if included in the amendments made by
section 2502 of the Mortgage Disclosure Improvement Act of 2008
(Public Law 110–289).

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SEC. 131. EXCHANGE STABILIZATION FUND REIMBURSEMENT.

Good faith
estimate.
Deadline.

Disclosure
statement.
Deadline.

15 USC 1638
note.

12 USC 5236.

(a) REIMBURSEMENT.—The Secretary shall reimburse the
Exchange Stabilization Fund established under section 5302 of title
31, United States Code, for any funds that are used for the Treasury
Money Market Funds Guaranty Program for the United States
money market mutual fund industry, from funds under this Act.
(b) LIMITS ON USE OF EXCHANGE STABILIZATION FUND.—The
Secretary is prohibited from using the Exchange Stabilization Fund

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122 STAT. 3798

PUBLIC LAW 110–343—OCT. 3, 2008

for the establishment of any future guaranty programs for the
United States money market mutual fund industry.
12 USC 5237.

SEC. 132. AUTHORITY TO SUSPEND MARK-TO-MARKET ACCOUNTING.

(a) AUTHORITY.—The Securities and Exchange Commission
shall have the authority under the securities laws (as such term
is defined in section 3(a)(47) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(47)) to suspend, by rule, regulation, or order,
the application of Statement Number 157 of the Financial
Accounting Standards Board for any issuer (as such term is defined
in section 3(a)(8) of such Act) or with respect to any class or
category of transaction if the Commission determines that is necessary or appropriate in the public interest and is consistent with
the protection of investors.
(b) SAVINGS PROVISION.—Nothing in subsection (a) shall be
construed to restrict or limit any authority of the Securities and
Exchange Commission under securities laws as in effect on the
date of enactment of this Act.
12 USC 5238.

SEC. 133. STUDY ON MARK-TO-MARKET ACCOUNTING.

(a) STUDY.—The Securities and Exchange Commission, in consultation with the Board and the Secretary, shall conduct a study
on mark-to-market accounting standards as provided in Statement
Number 157 of the Financial Accounting Standards Board, as such
standards are applicable to financial institutions, including depository institutions. Such a study shall consider at a minimum—
(1) the effects of such accounting standards on a financial
institution’s balance sheet;
(2) the impacts of such accounting on bank failures in
2008;
(3) the impact of such standards on the quality of financial
information available to investors;
(4) the process used by the Financial Accounting Standards
Board in developing accounting standards;
(5) the advisability and feasibility of modifications to such
standards; and
(6) alternative accounting standards to those provided in
such Statement Number 157.
(b) REPORT.—The Securities and Exchange Commission shall
submit to Congress a report of such study before the end of the
90-day period beginning on the date of the enactment of this Act
containing the findings and determinations of the Commission,
including such administrative and legislative recommendations as
the Commission determines appropriate.
12 USC 5239.

SEC. 134. RECOUPMENT.

Reports.
Deadline.

Upon the expiration of the 5-year period beginning upon the
date of the enactment of this Act, the Director of the Office of
Management and Budget, in consultation with the Director of the
Congressional Budget Office, shall submit a report to the Congress
on the net amount within the Troubled Asset Relief Program under
this Act. In any case where there is a shortfall, the President
shall submit a legislative proposal that recoups from the financial
industry an amount equal to the shortfall in order to ensure that
the Troubled Asset Relief Program does not add to the deficit
or national debt.

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President.
Legislation.

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3799

SEC. 135. PRESERVATION OF AUTHORITY.

12 USC 5240.

With the exception of section 131, nothing in this Act may
be construed to limit the authority of the Secretary or the Board
under any other provision of law.
SEC. 136. TEMPORARY INCREASE IN DEPOSIT AND SHARE INSURANCE
COVERAGE.

(a) FEDERAL DEPOSIT INSURANCE ACT; TEMPORARY INCREASE
DEPOSIT INSURANCE.—
(1) INCREASED AMOUNT.—Effective only during the period
beginning on the date of enactment of this Act and ending
on December 31, 2009, section 11(a)(1)(E) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(a)(1)(E)) shall apply with
‘‘$250,000’’ substituted for ‘‘$100,000’’.
(2) TEMPORARY INCREASE NOT TO BE CONSIDERED FOR SETTING ASSESSMENTS.—The temporary increase in the standard
maximum deposit insurance amount made under paragraph
(1) shall not be taken into account by the Board of Directors
of the Corporation for purposes of setting assessments under
section 7(b)(2) of the Federal Deposit Insurance Act (12 U.S.C.
1817(b)(2)).
(3) BORROWING LIMITS TEMPORARILY LIFTED.—During the
period beginning on the date of enactment of this Act and
ending on December 31, 2009, the Board of Directors of the
Corporation may request from the Secretary, and the Secretary
shall approve, a loan or loans in an amount or amounts necessary to carry out this subsection, without regard to the limitations on such borrowing under section 14(a) and 15(c) of the
Federal Deposit Insurance Act (12 U.S.C. 1824(a), 1825(c)).
(b) FEDERAL CREDIT UNION ACT; TEMPORARY INCREASE IN
SHARE INSURANCE.—
(1) INCREASED AMOUNT.—Effective only during the period
beginning on the date of enactment of this Act and ending
on December 31, 2009, section 207(k)(5) of the Federal Credit
Union Act (12 U.S.C. 1787(k)(5)) shall apply with ‘‘$250,000’’
substituted for ‘‘$100,000’’.
(2) TEMPORARY INCREASE NOT TO BE CONSIDERED FOR SET-

Effective dates.
Termination
dates.
12 USC 5241.

IN

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TING INSURANCE PREMIUM CHARGES AND INSURANCE DEPOSIT
ADJUSTMENTS.—The temporary increase in the standard max-

imum share insurance amount made under paragraph (1) shall
not be taken into account by the National Credit Union
Administration Board for purposes of setting insurance premium charges and share insurance deposit adjustments under
section 202(c)(2) of the Federal Credit Union Act (12 U.S.C.
1782(c)(2)).
(3) BORROWING LIMITS TEMPORARILY LIFTED.—During the
period beginning on the date of enactment of this Act and
ending on December 31, 2009, the National Credit Union
Administration Board may request from the Secretary, and
the Secretary shall approve, a loan or loans in an amount
or amounts necessary to carry out this subsection, without
regard to the limitations on such borrowing under section
203(d)(1) of the Federal Credit Union Act (12 U.S.C. 1783(d)(1)).
(c) NOT FOR USE IN INFLATION ADJUSTMENTS.—The temporary
increase in the standard maximum deposit insurance amount made
under this section shall not be used to make any inflation adjustment under section 11(a)(1)(F) of the Federal Deposit Insurance

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122 STAT. 3800

PUBLIC LAW 110–343—OCT. 3, 2008

Act (12 U.S.C. 1821(a)(1)(F)) for purposes of that Act or the Federal
Credit Union Act.

TITLE II—BUDGET-RELATED
PROVISIONS
12 USC 5251.

SEC. 201. INFORMATION FOR CONGRESSIONAL SUPPORT AGENCIES.

Upon request, and to the extent otherwise consistent with
law, all information used by the Secretary in connection with activities authorized under this Act (including the records to which
the Comptroller General is entitled under this Act) shall be made
available to congressional support agencies (in accordance with
their obligations to support the Congress as set out in their authorizing statutes) for the purposes of assisting the committees of Congress with conducting oversight, monitoring, and analysis of the
activities authorized under this Act.

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12 USC 5252.

SEC. 202. REPORTS BY THE OFFICE OF MANAGEMENT AND BUDGET
AND THE CONGRESSIONAL BUDGET OFFICE.

(a) REPORTS BY THE OFFICE OF MANAGEMENT AND BUDGET.—
Within 60 days of the first exercise of the authority granted in
section 101(a), but in no case later than December 31, 2008, and
semiannually thereafter, the Office of Management and Budget
shall report to the President and the Congress—
(1) the estimate, notwithstanding section 502(5)(F) of the
Federal Credit Reform Act of 1990 (2 U.S.C. 661a(5)(F)), as
of the first business day that is at least 30 days prior to
the issuance of the report, of the cost of the troubled assets,
and guarantees of the troubled assets, determined in accordance
with section 123;
(2) the information used to derive the estimate, including
assets purchased or guaranteed, prices paid, revenues received,
the impact on the deficit and debt, and a description of any
outstanding commitments to purchase troubled assets; and
(3) a detailed analysis of how the estimate has changed
from the previous report.
Beginning with the second report under subsection (a), the Office
of Management and Budget shall explain the differences between
the Congressional Budget Office estimates delivered in accordance
with subsection (b) and prior Office of Management and Budget
estimates.
(b) REPORTS BY THE CONGRESSIONAL BUDGET OFFICE.—Within
45 days of receipt by the Congress of each report from the Office
of Management and Budget under subsection (a), the Congressional
Budget Office shall report to the Congress the Congressional Budget
Office’s assessment of the report submitted by the Office of Management and Budget, including—
(1) the cost of the troubled assets and guarantees of the
troubled assets,
(2) the information and valuation methods used to calculate
such cost, and
(3) the impact on the deficit and the debt.
(c) FINANCIAL EXPERTISE.—In carrying out the duties in this
subsection or performing analyses of activities under this Act, the
Director of the Congressional Budget Office may employ personnel
and procure the services of experts and consultants.

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122 STAT. 3801

(d) AUTHORIZATION OF APPROPRIATIONS.—There are authorized
to be appropriated such sums as may be necessary to produce
reports required by this section.
SEC. 203. ANALYSIS IN PRESIDENT’S BUDGET.

(a) IN GENERAL.—Section 1105(a) of title 31, United States
Code, is amended by adding at the end the following new paragraph:
‘‘(35) as supplementary materials, a separate analysis of
the budgetary effects for all prior fiscal years, the current
fiscal year, the fiscal year for which the budget is submitted,
and ensuing fiscal years of the actions the Secretary of the
Treasury has taken or plans to take using any authority provided in the Emergency Economic Stabilization Act of 2008,
including—
‘‘(A) an estimate of the current value of all assets
purchased, sold, and guaranteed under the authority provided in the Emergency Economic Stabilization Act of 2008
using methodology required by the Federal Credit Reform
Act of 1990 (2 U.S.C. 661 et seq.) and section 123 of
the Emergency Economic Stabilization Act of 2008;
‘‘(B) an estimate of the deficit, the debt held by the
public, and the gross Federal debt using methodology
required by the Federal Credit Reform Act of 1990 and
section 123 of the Emergency Economic Stabilization Act
of 2008;
‘‘(C) an estimate of the current value of all assets
purchased, sold, and guaranteed under the authority provided in the Emergency Economic Stabilization Act of 2008
calculated on a cash basis;
‘‘(D) a revised estimate of the deficit, the debt held
by the public, and the gross Federal debt, substituting
the cash-based estimates in subparagraph (C) for the estimates calculated under subparagraph (A) pursuant to the
Federal Credit Reform Act of 1990 and section 123 of
the Emergency Economic Stabilization Act of 2008; and
‘‘(E) the portion of the deficit which can be attributed
to any action taken by the Secretary using authority provided by the Emergency Economic Stabilization Act of 2008
and the extent to which the change in the deficit since
the most recent estimate is due to a reestimate using
the methodology required by the Federal Credit Reform
Act of 1990 and section 123 of the Emergency Economic
Stabilization Act of 2008.’’
(b) CONSULTATION.—In implementing this section, the Director
of Office of Management and Budget shall consult periodically,
but at least annually, with the Committee on the Budget of the
House of Representatives, the Committee on the Budget of the
Senate, and the Director of the Congressional Budget Office.
(c) EFFECTIVE DATE.—This section and the amendment made
by this section shall apply beginning with respect to the fiscal
year 2010 budget submission of the President.

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SEC. 204. EMERGENCY TREATMENT.

31 USC 1105
note.

31 USC 1105
note.

12 USC 5253.

All provisions of this Act are designated as an emergency
requirement and necessary to meet emergency needs pursuant to
section 204(a) of S. Con. Res 21 (110th Congress), the concurrent
resolution on the budget for fiscal year 2008 and rescissions of

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PUBLIC LAW 110–343—OCT. 3, 2008

any amounts provided in this Act shall not be counted for purposes
of budget enforcement.

TITLE III—TAX PROVISIONS
12 USC 5261.

Definition.

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Definition.

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SEC. 301. GAIN OR LOSS FROM SALE OR EXCHANGE OF CERTAIN PREFERRED STOCK.

(a) IN GENERAL.—For purposes of the Internal Revenue Code
of 1986, gain or loss from the sale or exchange of any applicable
preferred stock by any applicable financial institution shall be
treated as ordinary income or loss.
(b) APPLICABLE PREFERRED STOCK.—For purposes of this section, the term ‘‘applicable preferred stock’’ means any stock—
(1) which is preferred stock in—
(A) the Federal National Mortgage Association, established pursuant to the Federal National Mortgage Association Charter Act (12 U.S.C. 1716 et seq.), or
(B) the Federal Home Loan Mortgage Corporation,
established pursuant to the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1451 et seq.), and
(2) which—
(A) was held by the applicable financial institution
on September 6, 2008, or
(B) was sold or exchanged by the applicable financial
institution on or after January 1, 2008, and before September 7, 2008.
(c) APPLICABLE FINANCIAL INSTITUTION.—For purposes of this
section:
(1) IN GENERAL.—Except as provided in paragraph (2), the
term ‘‘applicable financial institution’’ means—
(A) a financial institution referred to in section
582(c)(2) of the Internal Revenue Code of 1986, or
(B) a depository institution holding company (as
defined in section 3(w)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(w)(1))).
(2) SPECIAL RULES FOR CERTAIN SALES.—In the case of—
(A) a sale or exchange described in subsection (b)(2)(B),
an entity shall be treated as an applicable financial institution only if it was an entity described in subparagraph
(A) or (B) of paragraph (1) at the time of the sale or
exchange, and
(B) a sale or exchange after September 6, 2008, of
preferred stock described in subsection (b)(2)(A), an entity
shall be treated as an applicable financial institution only
if it was an entity described in subparagraph (A) or (B)
of paragraph (1) at all times during the period beginning
on September 6, 2008, and ending on the date of the
sale or exchange of the preferred stock.
(d) SPECIAL RULE FOR CERTAIN PROPERTY NOT HELD ON SEPTEMBER 6, 2008.—The Secretary of the Treasury or the Secretary’s
delegate may extend the application of this section to all or a
portion of the gain or loss from a sale or exchange in any case
where—
(1) an applicable financial institution sells or exchanges
applicable preferred stock after September 6, 2008, which the
applicable financial institution did not hold on such date, but

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the basis of which in the hands of the applicable financial
institution at the time of the sale or exchange is the same
as the basis in the hands of the person which held such stock
on such date, or
(2) the applicable financial institution is a partner in a
partnership which—
(A) held such stock on September 6, 2008, and later
sold or exchanged such stock, or
(B) sold or exchanged such stock during the period
described in subsection (b)(2)(B).
(e) REGULATORY AUTHORITY.—The Secretary of the Treasury
or the Secretary’s delegate may prescribe such guidance, rules,
or regulations as are necessary to carry out the purposes of this
section.
(f) EFFECTIVE DATE.—This section shall apply to sales or
exchanges occurring after December 31, 2007, in taxable years
ending after such date.

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SEC. 302. SPECIAL RULES FOR TAX TREATMENT OF EXECUTIVE COMPENSATION OF EMPLOYERS PARTICIPATING IN THE TROUBLED ASSETS RELIEF PROGRAM.

(a) DENIAL OF DEDUCTION.—Subsection (m) of section 162 of
the Internal Revenue Code of 1986 is amended by adding at the
end the following new paragraph:
‘‘(5) SPECIAL RULE FOR APPLICATION TO EMPLOYERS PARTICIPATING IN THE TROUBLED ASSETS RELIEF PROGRAM.—
‘‘(A) IN GENERAL.—In the case of an applicable
employer, no deduction shall be allowed under this
chapter—
‘‘(i) in the case of executive remuneration for any
applicable taxable year which is attributable to services
performed by a covered executive during such
applicable taxable year, to the extent that the amount
of such remuneration exceeds $500,000, or
‘‘(ii) in the case of deferred deduction executive
remuneration for any taxable year for services performed during any applicable taxable year by a covered
executive, to the extent that the amount of such remuneration exceeds $500,000 reduced (but not below zero)
by the sum of—
‘‘(I) the executive remuneration for such
applicable taxable year, plus
‘‘(II) the portion of the deferred deduction
executive remuneration for such services which
was taken into account under this clause in a
preceding taxable year.
‘‘(B) APPLICABLE EMPLOYER.—For purposes of this paragraph—
‘‘(i) IN GENERAL.—Except as provided in clause
(ii), the term ‘applicable employer’ means any employer
from whom 1 or more troubled assets are acquired
under a program established by the Secretary under
section 101(a) of the Emergency Economic Stabilization
Act of 2008 if the aggregate amount of the assets
so acquired for all taxable years exceeds $300,000,000.
‘‘(ii) DISREGARD OF CERTAIN ASSETS SOLD THROUGH
DIRECT PURCHASE.—If the only sales of troubled assets

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26 USC 162.

Definition.

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122 STAT. 3804

PUBLIC LAW 110–343—OCT. 3, 2008
by an employer under the program described in clause
(i) are through 1 or more direct purchases (within
the meaning of section 113(c) of the Emergency Economic Stabilization Act of 2008), such assets shall not
be taken into account under clause (i) in determining
whether the employer is an applicable employer for
purposes of this paragraph.
‘‘(iii) AGGREGATION RULES.—Two or more persons
who are treated as a single employer under subsection
(b) or (c) of section 414 shall be treated as a single
employer, except that in applying section 1563(a) for
purposes of either such subsection, paragraphs (2) and
(3) thereof shall be disregarded.
‘‘(C) APPLICABLE TAXABLE YEAR.—For purposes of this
paragraph, the term ‘applicable taxable year’ means, with
respect to any employer—
‘‘(i) the first taxable year of the employer—
‘‘(I) which includes any portion of the period
during which the authorities under section 101(a)
of the Emergency Economic Stabilization Act of
2008 are in effect (determined under section 120
thereof), and
‘‘(II) in which the aggregate amount of troubled assets acquired from the employer during the
taxable year pursuant to such authorities (other
than assets to which subparagraph (B)(ii) applies),
when added to the aggregate amount so acquired
for all preceding taxable years, exceeds
$300,000,000, and
‘‘(ii) any subsequent taxable year which includes
any portion of such period.
‘‘(D) COVERED EXECUTIVE.—For purposes of this paragraph—
‘‘(i) IN GENERAL.—The term ‘covered executive’
means, with respect to any applicable taxable year,
any employee—
‘‘(I) who, at any time during the portion of
the taxable year during which the authorities
under section 101(a) of the Emergency Economic
Stabilization Act of 2008 are in effect (determined
under section 120 thereof), is the chief executive
officer of the applicable employer or the chief financial officer of the applicable employer, or an individual acting in either such capacity, or
‘‘(II) who is described in clause (ii).
‘‘(ii) HIGHEST COMPENSATED EMPLOYEES.—An
employee is described in this clause if the employee
is 1 of the 3 highest compensated officers of the
applicable employer for the taxable year (other than
an individual described in clause (i)(I)), determined—
‘‘(I) on the basis of the shareholder disclosure
rules for compensation under the Securities
Exchange Act of 1934 (without regard to whether
those rules apply to the employer), and
‘‘(II) by only taking into account employees
employed during the portion of the taxable year
described in clause (i)(I).

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3805

‘‘(iii) EMPLOYEE REMAINS COVERED EXECUTIVE.—
If an employee is a covered executive with respect
to an applicable employer for any applicable taxable
year, such employee shall be treated as a covered
executive with respect to such employer for all subsequent applicable taxable years and for all subsequent
taxable years in which deferred deduction executive
remuneration with respect to services performed in
all such applicable taxable years would (but for this
paragraph) be deductible.
‘‘(E) EXECUTIVE REMUNERATION.—For purposes of this
paragraph, the term ‘executive remuneration’ means the
applicable employee remuneration of the covered executive,
as determined under paragraph (4) without regard to subparagraphs (B), (C), and (D) thereof. Such term shall not
include any deferred deduction executive remuneration
with respect to services performed in a prior applicable
taxable year.
‘‘(F) DEFERRED DEDUCTION EXECUTIVE REMUNERATION.—For purposes of this paragraph, the term ‘deferred
deduction executive remuneration’ means remuneration
which would be executive remuneration for services performed in an applicable taxable year but for the fact that
the deduction under this chapter (determined without
regard to this paragraph) for such remuneration is allowable in a subsequent taxable year.
‘‘(G) COORDINATION.—Rules similar to the rules of subparagraphs (F) and (G) of paragraph (4) shall apply for
purposes of this paragraph.
‘‘(H) REGULATORY AUTHORITY.—The Secretary may prescribe such guidance, rules, or regulations as are necessary
to carry out the purposes of this paragraph and the Emergency Economic Stabilization Act of 2008, including the
extent to which this paragraph applies in the case of any
acquisition, merger, or reorganization of an applicable
employer.’’.
(b) GOLDEN PARACHUTE RULE.—Section 280G of the Internal
Revenue Code of 1986 is amended—
(1) by redesignating subsection (e) as subsection (f), and
(2) by inserting after subsection (d) the following new subsection:
‘‘(e) SPECIAL RULE FOR APPLICATION TO EMPLOYERS PARTICIPATING IN THE TROUBLED ASSETS RELIEF PROGRAM.—
‘‘(1) IN GENERAL.—In the case of the severance from employment of a covered executive of an applicable employer during
the period during which the authorities under section 101(a)
of the Emergency Economic Stabilization Act of 2008 are in
effect (determined under section 120 of such Act), this section
shall be applied to payments to such executive with the following modifications:
‘‘(A) Any reference to a disqualified individual (other
than in subsection (c)) shall be treated as a reference
to a covered executive.
‘‘(B) Any reference to a change described in subsection
(b)(2)(A)(i) shall be treated as a reference to an applicable
severance from employment of a covered executive, and
any reference to a payment contingent on such a change

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26 USC 280G.

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26 USC 162 note.

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26 USC 280G
note.

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shall be treated as a reference to any payment made during
an applicable taxable year of the employer on account
of such applicable severance from employment.
‘‘(C) Any reference to a corporation shall be treated
as a reference to an applicable employer.
‘‘(D) The provisions of subsections (b)(2)(C), (b)(4),
(b)(5), and (d)(5) shall not apply.
‘‘(2) DEFINITIONS AND SPECIAL RULES.—For purposes of this
subsection:
‘‘(A) DEFINITIONS.—Any term used in this subsection
which is also used in section 162(m)(5) shall have the
meaning given such term by such section.
‘‘(B) APPLICABLE SEVERANCE FROM EMPLOYMENT.—The
term ‘applicable severance from employment’ means any
severance from employment of a covered executive—
‘‘(i) by reason of an involuntary termination of
the executive by the employer, or
‘‘(ii) in connection with any bankruptcy, liquidation, or receivership of the employer.
‘‘(C) COORDINATION AND OTHER RULES.—
‘‘(i) IN GENERAL.—If a payment which is treated
as a parachute payment by reason of this subsection
is also a parachute payment determined without regard
to this subsection, this subsection shall not apply to
such payment.
‘‘(ii) REGULATORY AUTHORITY.—The Secretary may
prescribe such guidance, rules, or regulations as are
necessary—
‘‘(I) to carry out the purposes of this subsection
and the Emergency Economic Stabilization Act of
2008, including the extent to which this subsection
applies in the case of any acquisition, merger, or
reorganization of an applicable employer,
‘‘(II) to apply this section and section 4999
in cases where one or more payments with respect
to any individual are treated as parachute payments by reason of this subsection, and other payments with respect to such individual are treated
as parachute payments under this section without
regard to this subsection, and
‘‘(III) to prevent the avoidance of the application of this section through the mischaracterization
of a severance from employment as other than
an applicable severance from employment.’’.
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendment made by subsection (a)
shall apply to taxable years ending on or after the date of
the enactment of this Act.
(2) GOLDEN PARACHUTE RULE.—The amendments made by
subsection (b) shall apply to payments with respect to
severances occurring during the period during which the
authorities under section 101(a) of this Act are in effect (determined under section 120 of this Act).

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122 STAT. 3807

SEC. 303. EXTENSION OF EXCLUSION OF INCOME FROM DISCHARGE
OF QUALIFIED PRINCIPAL RESIDENCE INDEBTEDNESS.

(a) EXTENSION.—Subparagraph (E) of section 108(a)(1) of the
Internal Revenue Code of 1986 is amended by striking ‘‘January
1, 2010’’ and inserting ‘‘January 1, 2013’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to discharges of indebtedness occurring on or after
January 1, 2010.

26 USC 108.
26 USC 108 note.

DIVISION B—ENERGY IMPROVEMENT
AND EXTENSION ACT OF 2008
SEC. 1. SHORT TITLE, ETC.

(a) SHORT TITLE.—This division may be cited as the ‘‘Energy
Improvement and Extension Act of 2008’’.
(b) REFERENCE.—Except as otherwise expressly provided, whenever in this division 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 division
is as follows:

26 USC 1 et al.

Sec. 1. Short title, etc.
TITLE I—ENERGY PRODUCTION INCENTIVES
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

101.
102.
103.
104.
105.
106.
107.
108.
109.

Subtitle A—Renewable Energy Incentives
Renewable energy credit.
Production credit for electricity produced from marine renewables.
Energy credit.
Energy credit for small wind property.
Energy credit for geothermal heat pump systems.
Credit for residential energy efficient property.
New clean renewable energy bonds.
Credit for steel industry fuel.
Special rule to implement FERC and State electric restructuring policy.

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Subtitle B—Carbon Mitigation and Coal Provisions
Sec. 111. Expansion and modification of advanced coal project investment credit.
Sec. 112. Expansion and modification of coal gasification investment credit.
Sec. 113. Temporary increase in coal excise tax; funding of Black Lung Disability
Trust Fund.
Sec. 114. Special rules for refund of the coal excise tax to certain coal producers
and exporters.
Sec. 115. Tax credit for carbon dioxide sequestration.
Sec. 116. Certain income and gains relating to industrial source carbon dioxide
treated as qualifying income for publicly traded partnerships.
Sec. 117. Carbon audit of the tax code.
TITLE II—TRANSPORTATION AND DOMESTIC FUEL SECURITY PROVISIONS
Sec. 201. Inclusion of cellulosic biofuel in bonus depreciation for biomass ethanol
plant property.
Sec. 202. Credits for biodiesel and renewable diesel.
Sec. 203. Clarification that credits for fuel are designed to provide an incentive for
United States production.
Sec. 204. Extension and modification of alternative fuel credit.
Sec. 205. Credit for new qualified plug-in electric drive motor vehicles.
Sec. 206. Exclusion from heavy truck tax for idling reduction units and advanced
insulation.
Sec. 207. Alternative fuel vehicle refueling property credit.
Sec. 208. Certain income and gains relating to alcohol fuels and mixtures, biodiesel
fuels and mixtures, and alternative fuels and mixtures treated as qualifying income for publicly traded partnerships.

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PUBLIC LAW 110–343—OCT. 3, 2008

Sec. 209. Extension and modification of election to expense certain refineries.
Sec. 210. Extension of suspension of taxable income limit on percentage depletion
for oil and natural gas produced from marginal properties.
Sec. 211. Transportation fringe benefit to bicycle commuters.
TITLE III—ENERGY CONSERVATION AND EFFICIENCY PROVISIONS
301. Qualified energy conservation bonds.
302. Credit for nonbusiness energy property.
303. Energy efficient commercial buildings deduction.
304. New energy efficient home credit.
305. Modifications of energy efficient appliance credit for appliances produced
after 2007.
Sec. 306. Accelerated recovery period for depreciation of smart meters and smart
grid systems.
Sec. 307. Qualified green building and sustainable design projects.
Sec. 308. Special depreciation allowance for certain reuse and recycling property.
Sec.
Sec.
Sec.
Sec.
Sec.

TITLE IV—REVENUE PROVISIONS
Sec. 401. Limitation of deduction for income attributable to domestic production of
oil, gas, or primary products thereof.
Sec. 402. Elimination of the different treatment of foreign oil and gas extraction income and foreign oil related income for purposes of the foreign tax credit.
Sec. 403. Broker reporting of customer’s basis in securities transactions.
Sec. 404. 0.2 percent FUTA surtax.
Sec. 405. Increase and extension of Oil Spill Liability Trust Fund tax.

TITLE I—ENERGY PRODUCTION
INCENTIVES
Subtitle A—Renewable Energy Incentives
SEC. 101. RENEWABLE ENERGY CREDIT.

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26 USC 45.

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(a) EXTENSION OF CREDIT.—
(1) 1-YEAR EXTENSION FOR WIND AND REFINED COAL FACILITIES.—Paragraphs (1) and (8) of section 45(d) are each amended
by striking ‘‘January 1, 2009’’ and inserting ‘‘January 1, 2010’’.
(2) 2-YEAR EXTENSION FOR CERTAIN OTHER FACILITIES.—
Each of the following provisions of section 45(d) is amended
by striking ‘‘January 1, 2009’’ and inserting ‘‘January 1, 2011’’:
(A) Clauses (i) and (ii) of paragraph (2)(A).
(B) Clauses (i)(I) and (ii) of paragraph (3)(A).
(C) Paragraph (4).
(D) Paragraph (5).
(E) Paragraph (6).
(F) Paragraph (7).
(G) Subparagraphs (A) and (B) of paragraph (9).
(b) MODIFICATION OF REFINED COAL AS A QUALIFIED ENERGY
RESOURCE.—
(1) ELIMINATION OF INCREASED MARKET VALUE TEST.—Section 45(c)(7)(A)(i) (defining refined coal), as amended by section
108, is amended—
(A) by striking subclause (IV),
(B) by adding ‘‘and’’ at the end of subclause (II), and
(C) by striking ‘‘, and’’ at the end of subclause (III)
and inserting a period.
(2) INCREASE IN REQUIRED EMISSION REDUCTION.—Section
45(c)(7)(B) (defining qualified emission reduction) is amended
by inserting ‘‘at least 40 percent of the emissions of’’ after
‘‘nitrogen oxide and’’.

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122 STAT. 3809

(c) TRASH FACILITY CLARIFICATION.—Paragraph (7) of section
45(d) is amended—
(1) by striking ‘‘facility which burns’’ and inserting ‘‘facility
(other than a facility described in paragraph (6)) which uses’’,
and
(2) by striking ‘‘COMBUSTION’’.
(d) EXPANSION OF BIOMASS FACILITIES.—
(1) OPEN-LOOP BIOMASS FACILITIES.—Paragraph (3) of section 45(d) is amended by redesignating subparagraph (B) as
subparagraph (C) and by inserting after subparagraph (A) the
following new subparagraph:
‘‘(B) EXPANSION OF FACILITY.—Such term shall include
a new unit placed in service after the date of the enactment
of this subparagraph in connection with a facility described
in subparagraph (A), but only to the extent of the increased
amount of electricity produced at the facility by reason
of such new unit.’’.
(2) CLOSED-LOOP BIOMASS FACILITIES.—Paragraph (2) of section 45(d) is amended by redesignating subparagraph (B) as
subparagraph (C) and inserting after subparagraph (A) the
following new subparagraph:
‘‘(B) EXPANSION OF FACILITY.—Such term shall include
a new unit placed in service after the date of the enactment
of this subparagraph in connection with a facility described
in subparagraph (A)(i), but only to the extent of the
increased amount of electricity produced at the facility
by reason of such new unit.’’.
(e) MODIFICATION OF RULES FOR HYDROPOWER PRODUCTION.—
Subparagraph (C) of section 45(c)(8) is amended to read as follows:
‘‘(C) NONHYDROELECTRIC DAM.—For purposes of
subparagraph (A), a facility is described in this subparagraph if—
‘‘(i) the hydroelectric project installed on the nonhydroelectric dam is licensed by the Federal Energy
Regulatory Commission and meets all other applicable
environmental, licensing, and regulatory requirements,
‘‘(ii) the nonhydroelectric dam was placed in service
before the date of the enactment of this paragraph
and operated for flood control, navigation, or water
supply purposes and did not produce hydroelectric
power on the date of the enactment of this paragraph,
and
‘‘(iii) the hydroelectric project is operated so that
the water surface elevation at any given location and
time that would have occurred in the absence of the
hydroelectric project is maintained, subject to any
license requirements imposed under applicable law
that change the water surface elevation for the purpose
of improving environmental quality of the affected
waterway.
The Secretary, in consultation with the Federal Energy
Regulatory Commission, shall certify if a hydroelectric
project licensed at a nonhydroelectric dam meets the criteria in clause (iii). Nothing in this section shall affect
the standards under which the Federal Energy Regulatory
Commission issues licenses for and regulates hydropower
projects under part I of the Federal Power Act.’’.

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26 USC 45.

Certification.

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PUBLIC LAW 110–343—OCT. 3, 2008
(f) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to
property originally placed in service after December 31, 2008.
(2) REFINED COAL.—The amendments made by subsection
(b) shall apply to coal produced and sold from facilities placed
in service after December 31, 2008.
(3) TRASH FACILITY CLARIFICATION.—The amendments
made by subsection (c) shall apply to electricity produced and
sold after the date of the enactment of this Act.
(4) EXPANSION OF BIOMASS FACILITIES.—The amendments
made by subsection (d) shall apply to property placed in service
after the date of the enactment of this Act.

Applicability.
26 USC 45 note.

Electricity.

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

(a) IN GENERAL.—Paragraph (1) of section 45(c) is amended
by striking ‘‘and’’ at the end of subparagraph (G), by striking
the period at the end of subparagraph (H) and inserting ‘‘, and’’,
and by adding at the end the following new subparagraph:
‘‘(I) marine and hydrokinetic renewable energy.’’.
(b) MARINE RENEWABLES.—Subsection (c) of section 45 is
amended by adding at the end the following new paragraph:
‘‘(10) MARINE AND HYDROKINETIC RENEWABLE ENERGY.—
‘‘(A) IN GENERAL.—The term ‘marine and hydrokinetic
renewable energy’ means energy derived from—
‘‘(i) waves, tides, and currents in oceans, estuaries,
and tidal areas,
‘‘(ii) free flowing water in rivers, lakes, and
streams,
‘‘(iii) free flowing water in an irrigation system,
canal, or other man-made channel, including projects
that utilize nonmechanical structures to accelerate the
flow of water for electric power production purposes,
or
‘‘(iv) differentials in ocean temperature (ocean
thermal energy conversion).
‘‘(B) EXCEPTIONS.—Such term shall not include any
energy which is derived from any source which utilizes
a dam, diversionary structure (except as provided in
subparagraph (A)(iii)), or impoundment for electric power
production purposes.’’.
(c) DEFINITION OF FACILITY.—Subsection (d) of section 45 is
amended by adding at the end the following new paragraph:
‘‘(11) MARINE AND HYDROKINETIC RENEWABLE ENERGY
FACILITIES.—In the case of a facility producing electricity from
marine and hydrokinetic renewable energy, the term ‘qualified
facility’ means any facility owned by the taxpayer—
‘‘(A) which has a nameplate capacity rating of at least
150 kilowatts, and
‘‘(B) which is originally placed in service on or after
the date of the enactment of this paragraph and before
January 1, 2012.’’.
(d) CREDIT RATE.—Subparagraph (A) of section 45(b)(4) is
amended by striking ‘‘or (9)’’ and inserting ‘‘(9), or (11)’’.
(e) COORDINATION WITH SMALL IRRIGATION POWER.—Paragraph
(5) of section 45(d), as amended by section 101, is amended by

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striking ‘‘January 1, 2012’’ and inserting ‘‘the date of the enactment
of paragraph (11)’’.
(f) EFFECTIVE DATE.—The amendments made by this section
shall apply to electricity produced and sold after the date of the
enactment of this Act, in taxable years ending after such date.

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SEC. 103. ENERGY CREDIT.

(a) EXTENSION OF CREDIT.—
(1) SOLAR ENERGY PROPERTY.—Paragraphs (2)(A)(i)(II) and
(3)(A)(ii) of section 48(a) are each amended by striking ‘‘January
1, 2009’’ and inserting ‘‘January 1, 2017’’.
(2) FUEL CELL PROPERTY.—Subparagraph (E) of section
48(c)(1) is amended by striking ‘‘December 31, 2008’’ and
inserting ‘‘December 31, 2016’’.
(3) MICROTURBINE PROPERTY.—Subparagraph (E) of section
48(c)(2) is amended by striking ‘‘December 31, 2008’’ and
inserting ‘‘December 31, 2016’’.
(b) ALLOWANCE OF ENERGY CREDIT AGAINST ALTERNATIVE MINIMUM TAX.—
(1) IN GENERAL.—Subparagraph (B) of section 38(c)(4), as
amended by the Housing Assistance Tax Act of 2008, is
amended by redesignating clause (vi) as clause (vi) and (vii),
respectively, and by inserting after clause (iv) the following
new clause:
‘‘(v) the credit determined under section 46 to the
extent that such credit is attributable to the energy
credit determined under section 48,’’.
(2) TECHNICAL AMENDMENT.—Clause (vi) of section
38(c)(4)(B), as redesignated by paragraph (1), is amended by
striking ‘‘section 47 to the extent attributable to’’ and inserting
‘‘section 46 to the extent that such credit is attributable to
the rehabilitation credit under section 47, but only with respect
to’’.
(c) ENERGY CREDIT FOR COMBINED HEAT AND POWER SYSTEM
PROPERTY.—
(1) IN GENERAL.—Section 48(a)(3)(A) is amended by striking
‘‘or’’ at the end of clause (iii), by inserting ‘‘or’’ at the end
of clause (iv), and by adding at the end the following new
clause:
‘‘(v) combined heat and power system property,’’.
(2) COMBINED HEAT AND POWER SYSTEM PROPERTY.—Subsection (c) of section 48 is amended—
(A) by striking ‘‘QUALIFIED FUEL CELL PROPERTY;
QUALIFIED MICROTURBINE PROPERTY’’ in the heading and
inserting ‘‘DEFINITIONS’’, and
(B) by adding at the end the following new paragraph:
‘‘(3) COMBINED HEAT AND POWER SYSTEM PROPERTY.—
‘‘(A) COMBINED HEAT AND POWER SYSTEM PROPERTY.—
The term ‘combined heat and power system property’ means
property comprising a system—
‘‘(i) which uses the same energy source for the
simultaneous or sequential generation of electrical
power, mechanical shaft power, or both, in combination
with the generation of steam or other forms of useful
thermal energy (including heating and cooling applications),
‘‘(ii) which produces—

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‘‘(I) at least 20 percent of its total useful energy
in the form of thermal energy which is not used
to produce electrical or mechanical power (or combination thereof), and
‘‘(II) at least 20 percent of its total useful
energy in the form of electrical or mechanical
power (or combination thereof),
‘‘(iii) the energy efficiency percentage of which
exceeds 60 percent, and
‘‘(iv) which is placed in service before January
1, 2017.
‘‘(B) LIMITATION.—
‘‘(i) IN GENERAL.—In the case of combined heat
and power system property with an electrical capacity
in excess of the applicable capacity placed in service
during the taxable year, the credit under subsection
(a)(1) (determined without regard to this paragraph)
for such year shall be equal to the amount which
bears the same ratio to such credit as the applicable
capacity bears to the capacity of such property.
‘‘(ii) APPLICABLE CAPACITY.—For purposes of clause
(i), the term ‘applicable capacity’ means 15 megawatts
or a mechanical energy capacity of more than 20,000
horsepower or an equivalent combination of electrical
and mechanical energy capacities.
‘‘(iii) MAXIMUM CAPACITY.—The term ‘combined
heat and power system property’ shall not include any
property comprising a system if such system has a
capacity in excess of 50 megawatts or a mechanical
energy capacity in excess of 67,000 horsepower or an
equivalent combination of electrical and mechanical
energy capacities.
‘‘(C) SPECIAL RULES.—
‘‘(i) ENERGY EFFICIENCY PERCENTAGE.—For purposes of this paragraph, the energy efficiency percentage of a system is the fraction—
‘‘(I) the numerator of which is the total useful
electrical, thermal, and mechanical power produced by the system at normal operating rates,
and expected to be consumed in its normal application, and
‘‘(II) the denominator of which is the lower
heating value of the fuel sources for the system.
‘‘(ii) DETERMINATIONS MADE ON BTU BASIS.—The
energy efficiency percentage and the percentages under
subparagraph (A)(ii) shall be determined on a Btu
basis.
‘‘(iii) INPUT AND OUTPUT PROPERTY NOT
INCLUDED.—The term ‘combined heat and power
system property’ does not include property used to
transport the energy source to the facility or to distribute energy produced by the facility.
‘‘(D) SYSTEMS USING BIOMASS.—If a system is designed
to use biomass (within the meaning of paragraphs (2) and
(3) of section 45(c) without regard to the last sentence
of paragraph (3)(A)) for at least 90 percent of the energy
source—

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‘‘(i) subparagraph (A)(iii) shall not apply, but
‘‘(ii) the amount of credit determined under subsection (a) with respect to such system shall not exceed
the amount which bears the same ratio to such amount
of credit (determined without regard to this subparagraph) as the energy efficiency percentage of such
system bears to 60 percent.’’.
(3) CONFORMING AMENDMENT.—Section 48(a)(1) is amended
by striking ‘‘paragraphs (1)(B) and (2)(B)’’ and inserting ‘‘paragraphs (1)(B), (2)(B), and (3)(B)’’.
(d) INCREASE OF CREDIT LIMITATION FOR FUEL CELL PROPERTY.—Subparagraph (B) of section 48(c)(1) is amended by striking
‘‘$500’’ and inserting ‘‘$1,500’’.
(e) PUBLIC UTILITY PROPERTY TAKEN INTO ACCOUNT.—
(1) IN GENERAL.—Paragraph (3) of section 48(a) is amended
by striking the second sentence thereof.
(2) CONFORMING AMENDMENTS.—
(A) Paragraph (1) of section 48(c) is amended by
striking subparagraph (D) and redesignating subparagraph
(E) as subparagraph (D).
(B) Paragraph (2) of section 48(c) is amended by
striking subparagraph (D) and redesignating subparagraph
(E) as subparagraph (D).
(f) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall take effect
on the date of the enactment of this Act.
(2) ALLOWANCE AGAINST ALTERNATIVE MINIMUM TAX.—The
amendments made by subsection (b) shall apply to credits determined under section 46 of the Internal Revenue Code of 1986
in taxable years beginning after the date of the enactment
of this Act and to carrybacks of such credits.
(3) COMBINED HEAT AND POWER AND FUEL CELL PROPERTY.—
The amendments made by subsections (c) and (d) shall apply
to periods after the date of the enactment of this Act, in
taxable years ending after such date, under rules similar to
the rules of section 48(m) of the Internal Revenue Code of
1986 (as in effect on the day before the date of the enactment
of the Revenue Reconciliation Act of 1990).
(4) PUBLIC UTILITY PROPERTY.—The amendments made by
subsection (e) shall apply to periods after February 13, 2008,
in taxable years ending after such date, under rules similar
to the rules of section 48(m) of the Internal Revenue Code
of 1986 (as in effect on the day before the date of the enactment
of the Revenue Reconciliation Act of 1990).

26 USC 48 note.

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SEC. 104. ENERGY CREDIT FOR SMALL WIND PROPERTY.

(a) IN GENERAL.—Section 48(a)(3)(A), as amended by section
103, is amended by striking ‘‘or’’ at the end of clause (iv), by
adding ‘‘or’’ at the end of clause (v), and by inserting after clause
(v) the following new clause:
‘‘(vi) qualified small wind energy property,’’.
(b) 30 PERCENT CREDIT.—Section 48(a)(2)(A)(i) is amended by
striking ‘‘and’’ at the end of subclause (II) and by inserting after
subclause (III) the following new subclause:
‘‘(IV) qualified small wind energy property,
and’’.

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26 USC 48 note.

PUBLIC LAW 110–343—OCT. 3, 2008

(c) QUALIFIED SMALL WIND ENERGY PROPERTY.—Section 48(c),
as amended by section 103, is amended by adding at the end
the following new paragraph:
‘‘(4) QUALIFIED SMALL WIND ENERGY PROPERTY.—
‘‘(A) IN GENERAL.—The term ‘qualified small wind
energy property’ means property which uses a qualifying
small wind turbine to generate electricity.
‘‘(B) LIMITATION.—In the case of qualified small wind
energy property placed in service during the taxable year,
the credit otherwise determined under subsection (a)(1)
for such year with respect to all such property of the
taxpayer shall not exceed $4,000.
‘‘(C) QUALIFYING SMALL WIND TURBINE.—The term
‘qualifying small wind turbine’ means a wind turbine which
has a nameplate capacity of not more than 100 kilowatts.
‘‘(D) TERMINATION.—The term ‘qualified small wind
energy property’ shall not include any property for any
period after December 31, 2016.’’.
(d) CONFORMING AMENDMENT.—Section 48(a)(1), as amended
by section 103, is amended by striking ‘‘paragraphs (1)(B), (2)(B),
and (3)(B)’’ and inserting ‘‘paragraphs (1)(B), (2)(B), (3)(B), and
(4)(B)’’.
(e) EFFECTIVE DATE.—The amendments made by this section
shall apply to periods after the date of the enactment of this
Act, in taxable years ending after such date, under rules similar
to the rules of section 48(m) of the Internal Revenue Code of
1986 (as in effect on the day before the date of the enactment
of the Revenue Reconciliation Act of 1990).
SEC. 105. ENERGY CREDIT FOR GEOTHERMAL HEAT PUMP SYSTEMS.

26 USC 48 note.

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

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SEC. 106. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.

(a) EXTENSION.—Section 25D(g) is amended by striking
‘‘December 31, 2008’’ and inserting ‘‘December 31, 2016’’.
(b) REMOVAL OF LIMITATION FOR SOLAR ELECTRIC PROPERTY.—
(1) IN GENERAL.—Section 25D(b)(1), as amended by subsections (c) and (d), is amended—
(A) by striking subparagraph (A), and
(B) by redesignating subparagraphs (B) through (E)
as subparagraphs (A) through and (D), respectively.
(2) CONFORMING AMENDMENT.—Section 25D(e)(4)(A), as
amended by subsections (c) and (d), is amended—
(A) by striking clause (i), and

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(B) by redesignating clauses (ii) through (v) as clauses
(i) and (iv), respectively.
(c) CREDIT FOR RESIDENTIAL WIND PROPERTY.—
(1) IN GENERAL.—Section 25D(a) is amended by striking
‘‘and’’ at the end of paragraph (2), by striking the period at
the end of paragraph (3) and inserting ‘‘, and’’, and by adding
at the end the following new paragraph:
‘‘(4) 30 percent of the qualified small wind energy property
expenditures made by the taxpayer during such year.’’.
(2) LIMITATION.—Section 25D(b)(1) is amended by striking
‘‘and’’ at the end of subparagraph (B), by striking the period
at the end of subparagraph (C) and inserting ‘‘, and’’, and
by adding at the end the following new subparagraph:
‘‘(D) $500 with respect to each half kilowatt of capacity
(not to exceed $4,000) of wind turbines for which qualified
small wind energy property expenditures are made.’’.
(3) QUALIFIED SMALL WIND ENERGY PROPERTY EXPENDITURES.—
(A) IN GENERAL.—Section 25D(d) is amended by adding
at the end the following new paragraph:
‘‘(4) QUALIFIED SMALL WIND ENERGY PROPERTY EXPENDITURE.—The term ‘qualified small wind energy property expenditure’ means an expenditure for property which uses a wind
turbine to generate electricity for use in connection with a
dwelling unit located in the United States and used as a residence by the taxpayer.’’.
(B) NO DOUBLE BENEFIT.—Section 45(d)(1) is amended
by adding at the end the following new sentence: ‘‘Such
term shall not include any facility with respect to which
any qualified small wind energy property expenditure (as
defined in subsection (d)(4) of section 25D) is taken into
account in determining the credit under such section.’’.
(4) MAXIMUM EXPENDITURES IN CASE OF JOINT OCCUPANCY.—Section 25D(e)(4)(A) is amended by striking ‘‘and’’ at
the end of clause (ii), by striking the period at the end of
clause (iii) and inserting ‘‘, and’’, and by adding at the end
the following new clause:
‘‘(iv) $1,667 in the case of each half kilowatt of
capacity (not to exceed $13,333) of wind turbines for
which qualified small wind energy property expenditures are made.’’.
(d) CREDIT FOR GEOTHERMAL HEAT PUMP SYSTEMS.—
(1) IN GENERAL.—Section 25D(a), as amended by subsection
(c), is amended by striking ‘‘and’’ at the end of paragraph
(3), by striking the period at the end of paragraph (4) and
inserting ‘‘, and’’, and by adding at the end the following new
paragraph:
‘‘(5) 30 percent of the qualified geothermal heat pump
property expenditures made by the taxpayer during such year.’’.
(2) LIMITATION.—Section 25D(b)(1), as amended by subsection (c), is amended by striking ‘‘and’’ at the end of subparagraph (C), by striking the period at the end of subparagraph
(D) and inserting ‘‘, and’’, and by adding at the end the following
new subparagraph:
‘‘(E) $2,000 with respect to any qualified geothermal
heat pump property expenditures.’’.

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(3) QUALIFIED GEOTHERMAL HEAT PUMP PROPERTY EXPENDITURE.—Section 25D(d), as amended by subsection (c), is

amended by adding at the end the following new paragraph:
‘‘(5) QUALIFIED GEOTHERMAL HEAT PUMP PROPERTY EXPENDITURE.—
‘‘(A) IN GENERAL.—The term ‘qualified geothermal heat
pump property expenditure’ means an expenditure for
qualified geothermal heat pump property installed on or
in connection with a dwelling unit located in the United
States and used as a residence by the taxpayer.
‘‘(B) QUALIFIED GEOTHERMAL HEAT PUMP PROPERTY.—
The term ‘qualified geothermal heat pump property’ means
any equipment which—
‘‘(i) uses the ground or ground water as a thermal
energy source to heat the dwelling unit referred to
in subparagraph (A) or as a thermal energy sink to
cool such dwelling unit, and
‘‘(ii) meets the requirements of the Energy Star
program which are in effect at the time that the
expenditure for such equipment is made.’’.
(4) MAXIMUM EXPENDITURES IN CASE OF JOINT OCCUPANCY.—Section 25D(e)(4)(A), as amended by subsection (c),
is amended by striking ‘‘and’’ at the end of clause (iii), by
striking the period at the end of clause (iv) and inserting
‘‘, and’’, and by adding at the end the following new clause:
‘‘(v) $6,667 in the case of any qualified geothermal
heat pump property expenditures.’’.
(e) CREDIT ALLOWED AGAINST ALTERNATIVE MINIMUM TAX.—
(1) IN GENERAL.—Subsection (c) of section 25D is amended
to read as follows:
‘‘(c) LIMITATION BASED ON AMOUNT OF TAX; CARRYFORWARD
OF UNUSED CREDIT.—
‘‘(1) LIMITATION BASED ON AMOUNT OF TAX.—In the case
of a taxable year to which section 26(a)(2) does not apply,
the credit allowed under subsection (a) for the taxable year
shall not exceed the excess of—
‘‘(A) the sum of the regular tax liability (as defined
in section 26(b)) plus the tax imposed by section 55, over
‘‘(B) the sum of the credits allowable under this subpart
(other than this section) and section 27 for the taxable
year.
‘‘(2) CARRYFORWARD OF UNUSED CREDIT.—
‘‘(A) RULE FOR YEARS IN WHICH ALL PERSONAL CREDITS

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ALLOWED AGAINST REGULAR AND ALTERNATIVE MINIMUM
TAX.—In the case of a taxable year to which section 26(a)(2)

applies, if the credit allowable under subsection (a) exceeds
the limitation imposed by section 26(a)(2) for such taxable
year reduced by the sum of the credits allowable under
this subpart (other than this section), such excess shall
be carried to the succeeding taxable year and added to
the credit allowable under subsection (a) for such succeeding taxable year.
‘‘(B) RULE FOR OTHER YEARS.—In the case of a taxable
year to which section 26(a)(2) does not apply, if the credit
allowable under subsection (a) exceeds the limitation
imposed by paragraph (1) for such taxable year, such excess
shall be carried to the succeeding taxable year and added

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to the credit allowable under subsection (a) for such succeeding taxable year.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 23(b)(4)(B) is amended by inserting ‘‘and
section 25D’’ after ‘‘this section’’.
(B) Section 24(b)(3)(B) is amended by striking ‘‘and
25B’’ and inserting ‘‘, 25B, and 25D’’.
(C) Section 25B(g)(2) is amended by striking ‘‘section
23’’ and inserting ‘‘sections 23 and 25D’’.
(D) Section 26(a)(1) is amended by striking ‘‘and 25B’’
and inserting ‘‘25B, and 25D’’.
(f) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2007.
(2) SOLAR ELECTRIC PROPERTY LIMITATION.—The amendments made by subsection (b) shall apply to taxable years
beginning after December 31, 2008.
(3) APPLICATION OF EGTRRA SUNSET.—The amendments
made by subparagraphs (A) and (B) of subsection (e)(2) shall
be subject to title IX of the Economic Growth and Tax Relief
Reconciliation Act of 2001 in the same manner as the provisions
of such Act to which such amendments relate.

26 USC 23.

26 USC 23 note.

SEC. 107. NEW CLEAN RENEWABLE ENERGY BONDS.

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

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

‘‘(a) NEW CLEAN RENEWABLE ENERGY BOND.—For purposes of
this subpart, the term ‘new clean renewable energy bond’ means
any bond issued as part of an issue if—
‘‘(1) 100 percent of the available project proceeds of such
issue are to be used for capital expenditures incurred by governmental bodies, public power providers, or cooperative electric
companies for one or more qualified renewable energy facilities,
‘‘(2) the bond is issued by a qualified issuer, and
‘‘(3) the issuer designates such bond for purposes of this
section.
‘‘(b) REDUCED CREDIT AMOUNT.—The annual credit determined
under section 54A(b) with respect to any new clean renewable
energy bond shall be 70 percent of the amount so determined
without regard to this subsection.
‘‘(c) LIMITATION ON AMOUNT OF BONDS DESIGNATED.—
‘‘(1) IN GENERAL.—The maximum aggregate face amount
of bonds which may be designated under subsection (a) by
any issuer shall not exceed the limitation amount allocated
under this subsection to such issuer.
‘‘(2) NATIONAL LIMITATION ON AMOUNT OF BONDS DESIGNATED.—There is a national new clean renewable energy
bond limitation of $800,000,000 which shall be allocated by
the Secretary as provided in paragraph (3), except that—
‘‘(A) not more than 331⁄3 percent thereof may be allocated to qualified projects of public power providers,
‘‘(B) not more than 331⁄3 percent thereof may be allocated to qualified projects of governmental bodies, and

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122 STAT. 3818

‘‘(C) not more than 331⁄3 percent thereof may be allocated to qualified projects of cooperative electric companies.
‘‘(3) METHOD OF ALLOCATION.—
‘‘(A) ALLOCATION AMONG PUBLIC POWER PROVIDERS.—
After the Secretary determines the qualified projects of
public power providers which are appropriate for receiving
an allocation of the national new clean renewable energy
bond limitation, the Secretary shall, to the maximum extent
practicable, make allocations among such projects in such
manner that the amount allocated to each such project
bears the same ratio to the cost of such project as the
limitation under paragraph (2)(A) bears to the cost of all
such projects.
‘‘(B) ALLOCATION AMONG GOVERNMENTAL BODIES AND
COOPERATIVE ELECTRIC COMPANIES.—The Secretary shall
make allocations of the amount of the national new clean
renewable energy bond limitation described in paragraphs
(2)(B) and (2)(C) among qualified projects of governmental
bodies and cooperative electric companies, respectively, in
such manner as the Secretary determines appropriate.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED RENEWABLE ENERGY FACILITY.—The term
‘qualified renewable energy facility’ means a qualified facility
(as determined under section 45(d) without regard to paragraphs (8) and (10) thereof and to any placed in service date)
owned by a public power provider, a governmental body, or
a cooperative electric company.
‘‘(2) PUBLIC POWER PROVIDER.—The term ‘public power provider’ means a State utility with a service obligation, as such
terms are defined in section 217 of the Federal Power Act
(as in effect on the date of the enactment of this paragraph).
‘‘(3) GOVERNMENTAL BODY.—The term ‘governmental body’
means any State or Indian tribal government, or any political
subdivision thereof.
‘‘(4) COOPERATIVE ELECTRIC COMPANY.—The term ‘cooperative electric company’ means a mutual or cooperative electric
company described in section 501(c)(12) or section 1381(a)(2)(C).
‘‘(5) CLEAN RENEWABLE ENERGY BOND LENDER.—The term
‘clean renewable energy bond lender’ means a lender which
is a cooperative which is owned by, or has outstanding loans
to, 100 or more cooperative electric companies and is in existence on February 1, 2002, and shall include any affiliated
entity which is controlled by such lender.
‘‘(6) QUALIFIED ISSUER.—The term ‘qualified issuer’ means
a public power provider, a cooperative electric company, a
governmental body, a clean renewable energy bond lender, or
a not-for-profit electric utility which has received a loan or
loan guarantee under the Rural Electrification Act.’’.
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (1) of section 54A(d) is amended to read
as follows:
‘‘(1) QUALIFIED TAX CREDIT BOND.—The term ‘qualified tax
credit bond’ means—
‘‘(A) a qualified forestry conservation bond, or
‘‘(B) a new clean renewable energy bond,
which is part of an issue that meets requirements of paragraphs
(2), (3), (4), (5), and (6).’’.

26 USC 54A.

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(2) Subparagraph (C) of section 54A(d)(2) is amended to
read as follows:
‘‘(C) QUALIFIED PURPOSE.—For purposes of this paragraph, the term ‘qualified purpose’ means—
‘‘(i) in the case of a qualified forestry conservation
bond, a purpose specified in section 54B(e), and
‘‘(ii) in the case of a new clean renewable energy
bond, a purpose specified in section 54C(a)(1).’’.
(3) The table of sections for subpart I of part IV of subchapter A of chapter 1 is amended by adding at the end the
following new item:

26 USC 54A.

‘‘Sec. 54C. Qualified clean renewable energy bonds.’’.

(c) EXTENSION FOR CLEAN RENEWABLE ENERGY BONDS.—Subsection (m) of section 54 is amended by striking ‘‘December 31,
2008’’ and inserting ‘‘December 31, 2009’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to obligations issued after the date of the enactment
of this Act.

26 USC 54 note.

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SEC. 108. CREDIT FOR STEEL INDUSTRY FUEL.

(a) TREATMENT AS REFINED COAL.—
(1) IN GENERAL.—Subparagraph (A) of section 45(c)(7) of
the Internal Revenue Code of 1986 (relating to refined coal),
as amended by this Act, is amended to read as follows:
‘‘(A) IN GENERAL.—The term ‘refined coal’ means a
fuel—
‘‘(i) which—
‘‘(I) is a liquid, gaseous, or solid fuel produced
from coal (including lignite) or high carbon fly
ash, including such fuel used as a feedstock,
‘‘(II) is sold by the taxpayer with the reasonable expectation that it will be used for purpose
of producing steam,
‘‘(III) is certified by the taxpayer as resulting
(when used in the production of steam) in a qualified emission reduction, and
‘‘(IV) is produced in such a manner as to result
in an increase of at least 50 percent in the market
value of the refined coal (excluding any increase
caused by materials combined or added during
the production process), as compared to the value
of the feedstock coal, or
‘‘(ii) which is steel industry fuel.’’.
(2) STEEL INDUSTRY FUEL DEFINED.—Paragraph (7) of section 45(c) of such Code is amended by adding at the end
the following new subparagraph:
‘‘(C) STEEL INDUSTRY FUEL.—
‘‘(i) IN GENERAL.—The term ‘steel industry fuel’
means a fuel which—
‘‘(I) is produced through a process of liquifying
coal waste sludge and distributing it on coal, and
‘‘(II) is used as a feedstock for the manufacture
of coke.
‘‘(ii) COAL WASTE SLUDGE.—The term ‘coal waste
sludge’ means the tar decanter sludge and related

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Applicability.
26 USC 45.

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byproducts of the coking process, including such materials that have been stored in ground, in tanks and
in lagoons, that have been treated as hazardous wastes
under applicable Federal environmental rules absent
liquefaction and processing with coal into a feedstock
for the manufacture of coke.’’.
(b) CREDIT AMOUNT.—
(1) IN GENERAL.—Paragraph (8) of section 45(e) of the
Internal Revenue Code of 1986 (relating to refined coal production facilities) is amended by adding at the end the following
new subparagraph
‘‘(D) SPECIAL RULE FOR STEEL INDUSTRY FUEL.—
‘‘(i) IN GENERAL.—In the case of a taxpayer who
produces steel industry fuel—
‘‘(I) this paragraph shall be applied separately
with respect to steel industry fuel and other
refined coal, and
‘‘(II) in applying this paragraph to steel
industry fuel, the modifications in clause (ii) shall
apply.
‘‘(ii) MODIFICATIONS.—
‘‘(I) CREDIT AMOUNT.—Subparagraph (A) shall
be applied by substituting ‘$2 per barrel-of-oil
equivalent’ for ‘$4.375 per ton’.
‘‘(II) CREDIT PERIOD.—In lieu of the 10-year
period referred to in clauses (i) and (ii)(II) of
subparagraph (A), the credit period shall be the
period beginning on the later of the date such
facility was originally placed in service, the date
the modifications described in clause (iii) were
placed in service, or October 1, 2008, and ending
on the later of December 31, 2009, or the date
which is 1 year after the date such facility or
the modifications described in clause (iii) were
placed in service.
‘‘(III) NO PHASEOUT.—Subparagraph (B) shall
not apply.
‘‘(iii) MODIFICATIONS.—The modifications described
in this clause are modifications to an existing facility
which allow such facility to produce steel industry
fuel.
‘‘(iv) BARREL-OF-OIL EQUIVALENT.—For purposes of
this subparagraph, a barrel-of-oil equivalent is the
amount of steel industry fuel that has a Btu content
of 5,800,000 Btus.’’.
(2) INFLATION ADJUSTMENT.—Paragraph (2) of section 45(b)
of such Code is amended by inserting ‘‘the $3 amount in subsection (e)(8)(D)(ii)(I),’’ after ‘‘subsection (e)(8)(A),’’.
(c) TERMINATION.—Paragraph (8) of section 45(d) of the Internal
Revenue Code of 1986 (relating to refined coal production facility),
as amended by this Act, is amended to read as follows:
‘‘(8) REFINED COAL PRODUCTION FACILITY.—In the case of
a facility that produces refined coal, the term ‘refined coal
production facility’ means—
‘‘(A) with respect to a facility producing steel industry
fuel, any facility (or any modification to a facility) which
is placed in service before January 1, 2010, and

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‘‘(B) with respect to any other facility producing refined
coal, any facility placed in service after the date of the
enactment of the American Jobs Creation Act of 2004 and
before January 1, 2010.’’.
(d) COORDINATION WITH CREDIT FOR PRODUCING FUEL FROM
A NONCONVENTIONAL SOURCE.—
(1) IN GENERAL.—Subparagraph (B) of section 45(e)(9) of
the Internal Revenue Code of 1986 is amended—
(A) by striking ‘‘The term’’ and inserting the following:
‘‘(i) IN GENERAL.—The term’’, and
(B) by adding at the end the following new clause:
‘‘(ii) EXCEPTION FOR STEEL INDUSTRY COAL.—In the
case of a facility producing steel industry fuel, clause
(i) shall not apply to so much of the refined coal produced at such facility as is steel industry fuel.’’.
(2) NO DOUBLE BENEFIT.—Section 45K(g)(2) of such Code
is amended by adding at the end the following new subparagraph:
‘‘(E) COORDINATION WITH SECTION 45.—No credit shall
be allowed with respect to any qualified fuel which is
steel industry fuel (as defined in section 45(c)(7)) if a credit
is allowed to the taxpayer for such fuel under section
45.’’.
(e) EFFECTIVE DATE.—The amendments made by this section
shall apply to fuel produced and sold after September 30, 2008.

26 USC 45.

26 USC 45 note.

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SEC. 109. SPECIAL RULE TO IMPLEMENT FERC AND STATE ELECTRIC
RESTRUCTURING POLICY.

(a) EXTENSION FOR QUALIFIED ELECTRIC UTILITIES.—
(1) IN GENERAL.—Paragraph (3) of section 451(i) is amended
by inserting ‘‘(before January 1, 2010, in the case of a qualified
electric utility)’’ after ‘‘January 1, 2008’’.
(2) QUALIFIED ELECTRIC UTILITY.—Subsection (i) of section
451 is amended by redesignating paragraphs (6) through (10)
as paragraphs (7) through (11), respectively, and by inserting
after paragraph (5) the following new paragraph:
‘‘(6) QUALIFIED ELECTRIC UTILITY.—For purposes of this
subsection, the term ‘qualified electric utility’ means a person
that, as of the date of the qualifying electric transmission
transaction, is vertically integrated, in that it is both—
‘‘(A) a transmitting utility (as defined in section 3(23)
of the Federal Power Act (16 U.S.C. 796(23))) with respect
to the transmission facilities to which the election under
this subsection applies, and
‘‘(B) an electric utility (as defined in section 3(22) of
the Federal Power Act (16 U.S.C. 796(22))).’’.
(b) EXTENSION OF PERIOD FOR TRANSFER OF OPERATIONAL CONTROL AUTHORIZED BY FERC.—Clause (ii) of section 451(i)(4)(B) is
amended by striking ‘‘December 31, 2007’’ and inserting ‘‘the date
which is 4 years after the close of the taxable year in which
the transaction occurs’’.
(c) PROPERTY LOCATED OUTSIDE THE UNITED STATES NOT
TREATED AS EXEMPT UTILITY PROPERTY.—Paragraph (5) of section
451(i) is amended by adding at the end the following new subparagraph:
‘‘(C) EXCEPTION FOR PROPERTY LOCATED OUTSIDE THE
UNITED STATES.—The term ‘exempt utility property’ shall

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not include any property which is located outside the
United States.’’.
(d) EFFECTIVE DATES.—
(1) EXTENSION.—The amendments made by subsection (a)
shall apply to transactions after December 31, 2007.
(2) TRANSFERS OF OPERATIONAL CONTROL.—The amendment
made by subsection (b) shall take effect as if included in section
909 of the American Jobs Creation Act of 2004.
(3) EXCEPTION FOR PROPERTY LOCATED OUTSIDE THE UNITED
STATES.—The amendment made by subsection (c) shall apply
to transactions after the date of the enactment of this Act.

26 USC 451 note.

Subtitle B—Carbon Mitigation and Coal
Provisions
SEC. 111. EXPANSION AND MODIFICATION OF ADVANCED COAL
PROJECT INVESTMENT CREDIT.
26 USC 48A.

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Certification.

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(a) MODIFICATION OF CREDIT AMOUNT.—Section 48A(a) is
amended by striking ‘‘and’’ at the end of paragraph (1), by striking
the period at the end of paragraph (2) and inserting ‘‘, and’’, and
by adding at the end the following new paragraph:
‘‘(3) 30 percent of the qualified investment for such taxable
year in the case of projects described in clause (iii) of subsection
(d)(3)(B).’’.
(b) EXPANSION OF AGGREGATE CREDITS.—Section 48A(d)(3)(A)
is amended by striking ‘‘$1,300,000,000’’ and inserting
‘‘$2,550,000,000’’.
(c) AUTHORIZATION OF ADDITIONAL PROJECTS.—
(1) IN GENERAL.—Subparagraph (B) of section 48A(d)(3)
is amended to read as follows:
‘‘(B) PARTICULAR PROJECTS.—Of the dollar amount in
subparagraph (A), the Secretary is authorized to certify—
‘‘(i) $800,000,000 for integrated gasification combined cycle projects the application for which is submitted during the period described in paragraph
(2)(A)(i),
‘‘(ii) $500,000,000 for projects which use other
advanced coal-based generation technologies the
application for which is submitted during the period
described in paragraph (2)(A)(i), and
‘‘(iii) $1,250,000,000 for advanced coal-based
generation technology projects the application for
which is submitted during the period described in paragraph (2)(A)(ii).’’.
(2) APPLICATION PERIOD FOR ADDITIONAL PROJECTS.—
Subparagraph (A) of section 48A(d)(2) is amended to read as
follows:
‘‘(A) APPLICATION PERIOD.—Each applicant for certification under this paragraph shall submit an application
meeting the requirements of subparagraph (B). An
applicant may only submit an application—
‘‘(i) for an allocation from the dollar amount specified in clause (i) or (ii) of paragraph (3)(B) during
the 3-year period beginning on the date the Secretary
establishes the program under paragraph (1), and

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‘‘(ii) for an allocation from the dollar amount specified in paragraph (3)(B)(iii) during the 3-year period
beginning at the earlier of the termination of the period
described in clause (i) or the date prescribed by the
Secretary.’’.
(3) CAPTURE AND SEQUESTRATION OF CARBON DIOXIDE EMISSIONS REQUIREMENT.—
(A) IN GENERAL.—Section 48A(e)(1) is amended by
striking ‘‘and’’ at the end of subparagraph (E), by striking
the period at the end of subparagraph (F) and inserting
‘‘; and’’, and by adding at the end the following new
subparagraph:
‘‘(G) in the case of any project the application for which
is submitted during the period described in subsection
(d)(2)(A)(ii), the project includes equipment which separates
and sequesters at least 65 percent (70 percent in the case
of an application for reallocated credits under subsection
(d)(4)) of such project’s total carbon dioxide emissions.’’.
(B) HIGHEST PRIORITY FOR PROJECTS WHICH SEQUESTER
CARBON DIOXIDE EMISSIONS.—Section 48A(e)(3) is amended
by striking ‘‘and’’ at the end of subparagraph (A)(iii), by
striking the period at the end of subparagraph (B)(iii) and
inserting ‘‘, and’’, and by adding at the end the following
new subparagraph:
‘‘(C) give highest priority to projects with the greatest
separation and sequestration percentage of total carbon
dioxide emissions.’’.
(C) RECAPTURE OF CREDIT FOR FAILURE TO
SEQUESTER.—Section 48A is amended by adding at the
end the following new subsection:
‘‘(i) RECAPTURE OF CREDIT FOR FAILURE TO SEQUESTER.—The
Secretary shall provide for recapturing the benefit of any credit
allowable under subsection (a) with respect to any project which
fails to attain or maintain the separation and sequestration requirements of subsection (e)(1)(G).’’.
(4) ADDITIONAL PRIORITY FOR RESEARCH PARTNERSHIPS.—
Section 48A(e)(3)(B), as amended by paragraph (3)(B), is
amended—
(A) by striking ‘‘and’’ at the end of clause (ii),
(B) by redesignating clause (iii) as clause (iv), and
(C) by inserting after clause (ii) the following new
clause:
‘‘(iii) applicant participants who have a research
partnership with an eligible educational institution (as
defined in section 529(e)(5)), and’’.
(5) CLERICAL AMENDMENT.—Section 48A(e)(3) is amended
by striking ‘‘INTEGRATED GASIFICATION COMBINED CYCLE’’ in the
heading and inserting ‘‘CERTAIN’’.
(d) DISCLOSURE OF ALLOCATIONS.—Section 48A(d) is amended
by adding at the end the following new paragraph:
‘‘(5) DISCLOSURE OF ALLOCATIONS.—The Secretary shall,
upon making a certification under this subsection or section
48B(d), publicly disclose the identity of the applicant and the
amount of the credit certified with respect to such applicant.’’.
(e) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to

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26 USC 48A note.

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credits the application for which is submitted during the period
described in section 48A(d)(2)(A)(ii) of the Internal Revenue
Code of 1986 and which are allocated or reallocated after the
date of the enactment of this Act.
(2) DISCLOSURE OF ALLOCATIONS.—The amendment made
by subsection (d) shall apply to certifications made after the
date of the enactment of this Act.
(3) CLERICAL AMENDMENT.—The amendment made by subsection (c)(5) shall take effect as if included in the amendment
made by section 1307(b) of the Energy Tax Incentives Act
of 2005.

SEC. 112. EXPANSION AND MODIFICATION OF COAL GASIFICATION
INVESTMENT CREDIT.
26 USC 48B.

26 USC 48B note.

(a) MODIFICATION OF CREDIT AMOUNT.—Section 48B(a) is
amended by inserting ‘‘(30 percent in the case of credits allocated
under subsection (d)(1)(B))’’ after ‘‘20 percent’’.
(b) EXPANSION OF AGGREGATE CREDITS.—Section 48B(d)(1) is
amended by striking ‘‘shall not exceed $350,000,000’’ and all that
follows and inserting ‘‘shall not exceed—
‘‘(A) $350,000,000, plus
‘‘(B) $250,000,000 for qualifying gasification projects
that include equipment which separates and sequesters
at least 75 percent of such project’s total carbon dioxide
emissions.’’.
(c) RECAPTURE OF CREDIT FOR FAILURE TO SEQUESTER.—Section
48B is amended by adding at the end the following new subsection:
‘‘(f) RECAPTURE OF CREDIT FOR FAILURE TO SEQUESTER.—The
Secretary shall provide for recapturing the benefit of any credit
allowable under subsection (a) with respect to any project which
fails to attain or maintain the separation and sequestration requirements for such project under subsection (d)(1).’’.
(d) SELECTION PRIORITIES.—Section 48B(d) is amended by
adding at the end the following new paragraph:
‘‘(4) SELECTION PRIORITIES.—In determining which qualifying gasification projects to certify under this section, the
Secretary shall—
‘‘(A) give highest priority to projects with the greatest
separation and sequestration percentage of total carbon
dioxide emissions, and
‘‘(B) give high priority to applicant participants who
have a research partnership with an eligible educational
institution (as defined in section 529(e)(5)).’’.
(e) ELIGIBLE PROJECTS INCLUDE TRANSPORTATION GRADE
LIQUID FUELS.—Section 48B(c)(7) (defining eligible entity) is
amended by striking ‘‘and’’ at the end of subparagraph (F), by
striking the period at the end of subparagraph (G) and inserting
‘‘, and’’, and by adding at the end the following new subparagraph:
‘‘(H) transportation grade liquid fuels.’’.
(f) EFFECTIVE DATE.—The amendments made by this section
shall apply to credits described in section 48B(d)(1)(B) of the
Internal Revenue Code of 1986 which are allocated or reallocated
after the date of the enactment of this Act.

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

(a) EXTENSION OF TEMPORARY INCREASE.—Paragraph (2) of section 4121(e) is amended—

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122 STAT. 3825

(1) by striking ‘‘January 1, 2014’’ in subparagraph (A)
and inserting ‘‘December 31, 2018’’, and
(2) by striking ‘‘January 1 after 1981’’ in subparagraph
(B) and inserting ‘‘December 31 after 2007’’.
(b) RESTRUCTURING OF TRUST FUND DEBT.—
(1) DEFINITIONS.—For purposes of this subsection—
(A) MARKET VALUE OF THE OUTSTANDING REPAYABLE
ADVANCES, PLUS ACCRUED INTEREST.—The term ‘‘market
value of the outstanding repayable advances, plus accrued
interest’’ means the present value (determined by the Secretary of the Treasury as of the refinancing date and using
the Treasury rate as the discount rate) of the stream of
principal and interest payments derived assuming that
each repayable advance that is outstanding on the refinancing date is due on the 30th anniversary of the end
of the fiscal year in which the advance was made to the
Trust Fund, and that all such principal and interest payments are made on September 30 of the applicable fiscal
year.
(B) REFINANCING DATE.—The term ‘‘refinancing date’’
means the date occurring 2 days after the enactment of
this Act.
(C) REPAYABLE ADVANCE.—The term ‘‘repayable
advance’’ means an amount that has been appropriated
to the Trust Fund in order to make benefit payments
and other expenditures that are authorized under section
9501 of the Internal Revenue Code of 1986 and are required
to be repaid when the Secretary of the Treasury determines
that monies are available in the Trust Fund for such purpose.
(D) TREASURY RATE.—The term ‘‘Treasury rate’’ means
a rate determined by the Secretary of the Treasury, taking
into consideration current market yields on outstanding
marketable obligations of the United States of comparable
maturities.
(E) TREASURY 1-YEAR RATE.—The term ‘‘Treasury 1year rate’’ means a rate determined by the Secretary of
the Treasury, taking into consideration current market
yields on outstanding marketable obligations of the United
States with remaining periods to maturity of approximately
1 year, to have been in effect as of the close of business
1 business day prior to the date on which the Trust Fund
issues obligations to the Secretary of the Treasury under
paragraph (2)(B).
(2) REFINANCING OF OUTSTANDING PRINCIPAL OF REPAYABLE
ADVANCES AND UNPAID INTEREST ON SUCH ADVANCES.—
(A) TRANSFER TO GENERAL FUND.—On the refinancing
date, the Trust Fund shall repay the market value of
the outstanding repayable advances, plus accrued interest,
by transferring into the general fund of the Treasury the
following sums:
(i) The proceeds from obligations that the Trust
Fund shall issue to the Secretary of the Treasury in
such amounts as the Secretaries of Labor and the
Treasury shall determine and bearing interest at the
Treasury rate, and that shall be in such forms and
denominations and be subject to such other terms and

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26 USC 9501
note.

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conditions, including maturity, as the Secretary of the
Treasury shall prescribe.
(ii) All, or that portion, of the appropriation made
to the Trust Fund pursuant to paragraph (3) that
is needed to cover the difference defined in that paragraph.
(B) REPAYMENT OF OBLIGATIONS.—In the event that
the Trust Fund is unable to repay the obligations that
it has issued to the Secretary of the Treasury under
subparagraph (A)(i) and this subparagraph, or is unable
to make benefit payments and other authorized expenditures, the Trust Fund shall issue obligations to the Secretary of the Treasury in such amounts as may be necessary to make such repayments, payments, and expenditures, with a maturity of 1 year, and bearing interest
at the Treasury 1-year rate. These obligations shall be
in such forms and denominations and be subject to such
other terms and conditions as the Secretary of the Treasury
shall prescribe.
(C) AUTHORITY TO ISSUE OBLIGATIONS.—The Trust
Fund is authorized to issue obligations to the Secretary
of the Treasury under subparagraphs (A)(i) and (B). The
Secretary of the Treasury is authorized to purchase such
obligations of the Trust Fund. For the purposes of making
such purchases, the Secretary of the Treasury may use
as a public debt transaction the proceeds from the sale
of any securities issued under chapter 31 of title 31, United
States Code, and the purposes for which securities may
be issued under such chapter are extended to include any
purchase of such Trust Fund obligations under this
subparagraph.
(3) ONE-TIME APPROPRIATION.—There is hereby appropriated to the Trust Fund an amount sufficient to pay to
the general fund of the Treasury the difference between—
(A) the market value of the outstanding repayable
advances, plus accrued interest; and
(B) the proceeds from the obligations issued by the
Trust Fund to the Secretary of the Treasury under paragraph (2)(A)(i).
(4) PREPAYMENT OF TRUST FUND OBLIGATIONS.—The Trust
Fund is authorized to repay any obligation issued to the Secretary of the Treasury under subparagraphs (A)(i) and (B)
of paragraph (2) prior to its maturity date by paying a prepayment price that would, if the obligation being prepaid (including
all unpaid interest accrued thereon through the date of prepayment) were purchased by a third party and held to the maturity
date of such obligation, produce a yield to the third-party purchaser for the period from the date of purchase to the maturity
date of such obligation substantially equal to the Treasury
yield on outstanding marketable obligations of the United
States having a comparable maturity to this period.

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26 USC 4121
note.

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

(a) REFUND.—
(1) COAL PRODUCERS.—

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122 STAT. 3827

(A) IN GENERAL.—Notwithstanding subsections (a)(1)
and (c) of section 6416 and section 6511 of the Internal
Revenue Code of 1986, if—
(i) a coal producer establishes that such coal producer, or a party related to such coal producer,
exported coal produced by such coal producer to a
foreign country or shipped coal produced by such coal
producer to a possession of the United States, or caused
such coal to be exported or shipped, the export or
shipment of which was other than through an exporter
who meets the requirements of paragraph (2),
(ii) such coal producer filed an excise tax return
on or after October 1, 1990, and on or before the
date of the enactment of this Act, and
(iii) such coal producer files a claim for refund
with the Secretary not later than the close of the
30-day period beginning on the date of the enactment
of this Act,
then the Secretary shall pay to such coal producer an
amount equal to the tax paid under section 4121 of such
Code on such coal exported or shipped by the coal producer
or a party related to such coal producer, or caused by
the coal producer or a party related to such coal producer
to be exported or shipped.
(B) SPECIAL RULES FOR CERTAIN TAXPAYERS.—For purposes of this section—
(i) IN GENERAL.—If a coal producer or a party
related to a coal producer has received a judgment
described in clause (iii), such coal producer shall be
deemed to have established the export of coal to a
foreign country or shipment of coal to a possession
of the United States under subparagraph (A)(i).
(ii) AMOUNT OF PAYMENT.—If a taxpayer described
in clause (i) is entitled to a payment under subparagraph (A), the amount of such payment shall be
reduced by any amount paid pursuant to the judgment
described in clause (iii).
(iii) JUDGMENT DESCRIBED.—A judgment is
described in this subparagraph if such judgment—
(I) is made by a court of competent jurisdiction
within the United States,
(II) relates to the constitutionality of any tax
paid on exported coal under section 4121 of the
Internal Revenue Code of 1986, and
(III) is in favor of the coal producer or the
party related to the coal producer.
(2) EXPORTERS.—Notwithstanding subsections (a)(1) and (c)
of section 6416 and section 6511 of the Internal Revenue Code
of 1986, and a judgment described in paragraph (1)(B)(iii) of
this subsection, if—
(A) an exporter establishes that such exporter exported
coal to a foreign country or shipped coal to a possession
of the United States, or caused such coal to be so exported
or shipped,
(B) such exporter filed a tax return on or after October
1, 1990, and on or before the date of the enactment of
this Act, and

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Deadline.

Deadlines.

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Deadline.

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(C) such exporter files a claim for refund with the
Secretary not later than the close of the 30-day period
beginning on the date of the enactment of this Act,
then the Secretary shall pay to such exporter an amount equal
to $0.825 per ton of such coal exported by the exporter or
caused to be exported or shipped, or caused to be exported
or shipped, by the exporter.
(b) LIMITATIONS.—Subsection (a) shall not apply with respect
to exported coal if a settlement with the Federal Government has
been made with and accepted by, the coal producer, a party related
to such coal producer, or the exporter, of such coal, as of the
date that the claim is filed under this section with respect to
such exported coal. For purposes of this subsection, the term ‘‘settlement with the Federal Government’’ shall not include any settlement or stipulation entered into as of the date of the enactment
of this Act, the terms of which contemplate a judgment concerning
which any party has reserved the right to file an appeal, or has
filed an appeal.
(c) SUBSEQUENT REFUND PROHIBITED.—No refund shall be made
under this section to the extent that a credit or refund of such
tax on such exported or shipped coal has been paid to any person.
(d) DEFINITIONS.—For purposes of this section—
(1) COAL PRODUCER.—The term ‘‘coal producer’’ means the
person in whom is vested ownership of the coal immediately
after the coal is severed from the ground, without regard to
the existence of any contractual arrangement for the sale or
other disposition of the coal or the payment of any royalties
between the producer and third parties. The term includes
any person who extracts coal from coal waste refuse piles
or from the silt waste product which results from the wet
washing (or similar processing) of coal.
(2) EXPORTER.—The term ‘‘exporter’’ means a person, other
than a coal producer, who does not have a contract, fee arrangement, or any other agreement with a producer or seller of
such coal to export or ship such coal to a third party on
behalf of the producer or seller of such coal and—
(A) is indicated in the shipper’s export declaration or
other documentation as the exporter of record, or
(B) actually exported such coal to a foreign country
or shipped such coal to a possession of the United States,
or caused such coal to be so exported or shipped.
(3) RELATED PARTY.—The term ‘‘a party related to such
coal producer’’ means a person who—
(A) is related to such coal producer through any degree
of common management, stock ownership, or voting control,
(B) is related (within the meaning of section 144(a)(3)
of the Internal Revenue Code of 1986) to such coal producer,
or
(C) has a contract, fee arrangement, or any other agreement with such coal producer to sell such coal to a third
party on behalf of such coal producer.
(4) SECRETARY.—The term ‘‘Secretary’’ means the Secretary
of Treasury or the Secretary’s designee.
(e) TIMING OF REFUND.—With respect to any claim for refund
filed pursuant to this section, the Secretary shall determine whether
the requirements of this section are met not later than 180 days
after such claim is filed. If the Secretary determines that the

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requirements of this section are met, the claim for refund shall
be paid not later than 180 days after the Secretary makes such
determination.
(f) INTEREST.—Any refund paid pursuant to this section shall
be paid by the Secretary with interest from the date of overpayment
determined by using the overpayment rate and method under section 6621 of the Internal Revenue Code of 1986.
(g) DENIAL OF DOUBLE BENEFIT.—The payment under subsection (a) with respect to any coal shall not exceed—
(1) in the case of a payment to a coal producer, the amount
of tax paid under section 4121 of the Internal Revenue Code
of 1986 with respect to such coal by such coal producer or
a party related to such coal producer, and
(2) in the case of a payment to an exporter, an amount
equal to $0.825 per ton with respect to such coal exported
by the exporter or caused to be exported by the exporter.
(h) APPLICATION OF SECTION.—This section applies only to
claims on coal exported or shipped on or after October 1, 1990,
through the date of the enactment of this Act.
(i) STANDING NOT CONFERRED.—
(1) EXPORTERS.—With respect to exporters, this section
shall not confer standing upon an exporter to commence, or
intervene in, any judicial or administrative proceeding concerning a claim for refund by a coal producer of any Federal
or State tax, fee, or royalty paid by the coal producer.
(2) COAL PRODUCERS.—With respect to coal producers, this
section shall not confer standing upon a coal producer to commence, or intervene in, any judicial or administrative proceeding concerning a claim for refund by an exporter of any
Federal or State tax, fee, or royalty paid by the producer
and alleged to have been passed on to an exporter.
SEC. 115. TAX CREDIT FOR CARBON DIOXIDE SEQUESTRATION.

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

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

‘‘(a) GENERAL RULE.—For purposes of section 38, the carbon
dioxide sequestration credit for any taxable year is an amount
equal to the sum of—
‘‘(1) $20 per metric ton of qualified carbon dioxide which
is—
‘‘(A) captured by the taxpayer at a qualified facility,
and
‘‘(B) disposed of by the taxpayer in secure geological
storage, and
‘‘(2) $10 per metric ton of qualified carbon dioxide which
is—
‘‘(A) captured by the taxpayer at a qualified facility,
and
‘‘(B) used by the taxpayer as a tertiary injectant in
a qualified enhanced oil or natural gas recovery project.
‘‘(b) QUALIFIED CARBON DIOXIDE.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified carbon dioxide’
means carbon dioxide captured from an industrial source
which—

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‘‘(A) would otherwise be released into the atmosphere
as industrial emission of greenhouse gas, and
‘‘(B) is measured at the source of capture and verified
at the point of disposal or injection.
‘‘(2) RECYCLED CARBON DIOXIDE.—The term ‘qualified
carbon dioxide’ includes the initial deposit of captured carbon
dioxide used as a tertiary injectant. Such term does not include
carbon dioxide that is re-captured, recycled, and re-injected
as part of the enhanced oil and natural gas recovery process.
‘‘(c) QUALIFIED FACILITY.—For purposes of this section, the term
‘qualified facility’ means any industrial facility—
‘‘(1) which is owned by the taxpayer,
‘‘(2) at which carbon capture equipment is placed in service,
and
‘‘(3) which captures not less than 500,000 metric tons of
carbon dioxide during the taxable year.
‘‘(d) SPECIAL RULES AND OTHER DEFINITIONS.—For purposes
of this section—
‘‘(1) ONLY CARBON DIOXIDE CAPTURED AND DISPOSED OF
OR USED WITHIN THE UNITED STATES TAKEN INTO ACCOUNT.—
The credit under this section shall apply only with respect
to qualified carbon dioxide the capture and disposal or use
of which is within—
‘‘(A) the United States (within the meaning of section
638(1)), or
‘‘(B) a possession of the United States (within the
meaning of section 638(2)).
‘‘(2) SECURE GEOLOGICAL STORAGE.—The Secretary, in consultation with the Administrator of the Environmental Protection Agency, shall establish regulations for determining adequate security measures for the geological storage of carbon
dioxide under subsection (a)(1)(B) such that the carbon dioxide
does not escape into the atmosphere. Such term shall include
storage at deep saline formations and unminable coal seems
under such conditions as the Secretary may determine under
such regulations.
‘‘(3) TERTIARY INJECTANT.—The term ‘tertiary injectant’ has
the same meaning as when used within section 193(b)(1).
‘‘(4) QUALIFIED ENHANCED OIL OR NATURAL GAS RECOVERY
PROJECT.—The term ‘qualified enhanced oil or natural gas
recovery project’ has the meaning given the term ‘qualified
enhanced oil recovery project’ by section 43(c)(2), by substituting
‘crude oil or natural gas’ for ‘crude oil’ in subparagraph (A)(i)
thereof.
‘‘(5) CREDIT ATTRIBUTABLE TO TAXPAYER.—Any credit under
this section shall be attributable to the person that captures
and physically or contractually ensures the disposal of or the
use as a tertiary injectant of the qualified carbon dioxide,
except to the extent provided in regulations prescribed by the
Secretary.
‘‘(6) RECAPTURE.—The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under
subsection (a) with respect to any qualified carbon dioxide
which ceases to be captured, disposed of, or used as a tertiary
injectant in a manner consistent with the requirements of
this section.

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‘‘(7) INFLATION ADJUSTMENT.—In the case of any taxable
year beginning in a calendar year after 2009, there shall be
substituted for each dollar amount contained in subsection
(a) an amount equal to the product of—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the inflation adjustment factor for such calendar
year determined under section 43(b)(3)(B) for such calendar
year, determined by substituting ‘2008’ for ‘1990’.
‘‘(e) APPLICATION OF SECTION.—The credit under this section
shall apply with respect to qualified carbon dioxide before the
end of the calendar year in which the Secretary, in consultation
with the Administrator of the Environmental Protection Agency,
certifies that 75,000,000 metric tons of qualified carbon dioxide
have been captured and disposed of or used as a tertiary injectant.’’.
(b) CONFORMING AMENDMENT.—Section 38(b) (relating to general business credit) is amended by striking ‘‘plus’’ at the end
of paragraph (32), by striking the period at the end of paragraph
(33) and inserting ‘‘, plus’’, and by adding at the end of following
new paragraph:
‘‘(34) the carbon dioxide sequestration credit determined
under section 45Q(a).’’.
(c) CLERICAL AMENDMENT.—The table of sections for subpart
B of part IV of subchapter A of chapter 1 (relating to other credits)
is amended by adding at the end the following new section:

26 USC 38.

‘‘Sec. 45Q. Credit for carbon dioxide sequestration.’’.

(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to carbon dioxide captured after the date of the enactment of this Act.

26 USC 38 note.

SEC. 116. CERTAIN INCOME AND GAINS RELATING TO INDUSTRIAL
SOURCE CARBON DIOXIDE TREATED AS QUALIFYING
INCOME FOR PUBLICLY TRADED PARTNERSHIPS.

(a) IN GENERAL.—Subparagraph (E) of section 7704(d)(1)
(defining qualifying income) is amended by inserting ‘‘or industrial
source carbon dioxide’’ after ‘‘timber)’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall take effect on the date of the enactment of this Act, in
taxable years ending after such date.

26 USC 7704
note.

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SEC. 117. CARBON AUDIT OF THE TAX CODE.

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

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PUBLIC LAW 110–343—OCT. 3, 2008

TITLE II—TRANSPORTATION AND DOMESTIC FUEL SECURITY PROVISIONS
SEC. 201. INCLUSION OF CELLULOSIC BIOFUEL IN BONUS DEPRECIATION FOR BIOMASS ETHANOL PLANT PROPERTY.
26 USC 168.

Applicability.
26 USC 168 note.

(a) IN GENERAL.—Paragraph (3) of section 168(l) is amended
to read as follows:
‘‘(3) CELLULOSIC BIOFUEL.—The term ‘cellulosic biofuel’
means any liquid fuel which is produced from any lignocellulosic
or hemicellulosic matter that is available on a renewable or
recurring basis.’’.
(b) CONFORMING AMENDMENTS.—Subsection (l) of section 168
is amended—
(1) by striking ‘‘cellulosic biomass ethanol’’ each place it
appears and inserting ‘‘cellulosic biofuel’’,
(2) by striking ‘‘CELLULOSIC BIOMASS ETHANOL’’ in the
heading of such subsection and inserting ‘‘CELLULOSIC
BIOFUEL’’, and
(3) by striking ‘‘CELLULOSIC BIOMASS ETHANOL’’ in the
heading of paragraph (2) thereof and inserting ‘‘CELLULOSIC
BIOFUEL’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to property placed in service after the date of the
enactment of this Act, in taxable years ending after such date.

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SEC. 202. CREDITS FOR BIODIESEL AND RENEWABLE DIESEL.

(a) IN GENERAL.—Sections 40A(g), 6426(c)(6), and 6427(e)(5)(B)
are each amended by striking ‘‘December 31, 2008’’ and inserting
‘‘December 31, 2009’’.
(b) INCREASE IN RATE OF CREDIT.—
(1) INCOME TAX CREDIT.—Paragraphs (1)(A) and (2)(A) of
section 40A(b) are each amended by striking ‘‘50 cents’’ and
inserting ‘‘$1.00’’.
(2) EXCISE TAX CREDIT.—Paragraph (2) of section 6426(c)
is amended to read as follows:
‘‘(2) APPLICABLE AMOUNT.—For purposes of this subsection,
the applicable amount is $1.00.’’.
(3) CONFORMING AMENDMENTS.—
(A) Subsection (b) of section 40A is amended by striking
paragraph (3) and by redesignating paragraphs (4) and
(5) as paragraphs (3) and (4), respectively.
(B) Paragraph (2) of section 40A(f) is amended to read
as follows:
‘‘(2) EXCEPTION.—Subsection (b)(4) shall not apply with
respect to renewable diesel.’’.
(C) Paragraphs (2) and (3) of section 40A(e) are each
amended by striking ‘‘subsection (b)(5)(C)’’ and inserting
‘‘subsection (b)(4)(C)’’.
(D) Clause (ii) of section 40A(d)(3)(C) is amended by
striking ‘‘subsection (b)(5)(B)’’ and inserting ‘‘subsection
(b)(4)(B)’’.
(c) UNIFORM TREATMENT OF DIESEL PRODUCED FROM BIOMASS.—Paragraph (3) of section 40A(f) is amended—
(1) by striking ‘‘diesel fuel’’ and inserting ‘‘liquid fuel’’,
(2) by striking ‘‘using a thermal depolymerization process’’,
and

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(3) by inserting ‘‘, or other equivalent standard approved
by the Secretary’’ after ‘‘D396’’.
(d) COPRODUCTION OF RENEWABLE DIESEL WITH PETROLEUM
FEEDSTOCK.—
(1) IN GENERAL.—Paragraph (3) of section 40A(f) is
amended by adding at the end the following new sentences:
‘‘Such term does not include any fuel derived from coprocessing
biomass with a feedstock which is not biomass. For purposes
of this paragraph, the term ‘biomass’ has the meaning given
such term by section 45K(c)(3).’’.
(2) CONFORMING AMENDMENT.—Paragraph (3) of section
40A(f) is amended by striking ‘‘(as defined in section 45K(c)(3))’’.
(e) ELIGIBILITY OF CERTAIN AVIATION FUEL.—Subsection (f) of
section 40A (relating to renewable diesel) is amended by adding
at the end the following new paragraph:
‘‘(4) CERTAIN AVIATION FUEL.—
‘‘(A) IN GENERAL.—Except as provided in the last 3
sentences of paragraph (3), the term ‘renewable diesel’
shall include fuel derived from biomass which meets the
requirements of a Department of Defense specification for
military jet fuel or an American Society of Testing and
Materials specification for aviation turbine fuel.
‘‘(B) APPLICATION OF MIXTURE CREDITS.—In the case
of fuel which is treated as renewable diesel solely by reason
of subparagraph (A), subsection (b)(1) and section 6426(c)
shall be applied with respect to such fuel by treating kerosene as though it were diesel fuel.’’.
(f) MODIFICATION RELATING TO DEFINITION OF AGRI-BIODIESEL.—Paragraph (2) of section 40A(d) (relating to agri-biodiesel)
is amended by striking ‘‘and mustard seeds’’ and inserting ‘‘mustard
seeds, and camelina’’.
(g) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to
fuel produced, and sold or used, after December 31, 2008.
(2) COPRODUCTION OF RENEWABLE DIESEL WITH PETROLEUM
FEEDSTOCK.—The amendment made by subsection (d) shall
apply to fuel produced, and sold or used, after the date of
the enactment of this Act.

26 USC 40A.

Definition.

Applicability.
26 USC 40A note.

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

(a) ALCOHOL FUELS CREDIT.—Subsection (d) of section 40 is
amended by adding at the end the following new paragraph:
‘‘(7) LIMITATION TO ALCOHOL WITH CONNECTION TO THE
UNITED STATES.—No credit shall be determined under this section with respect to any alcohol which is produced outside
the United States for use as a fuel outside the United States.
For purposes of this paragraph, the term ‘United States’
includes any possession of the United States.’’.
(b) BIODIESEL FUELS CREDIT.—Subsection (d) of section 40A
is amended by adding at the end the following new paragraph:
‘‘(5) LIMITATION TO BIODIESEL WITH CONNECTION TO THE
UNITED STATES.—No credit shall be determined under this section with respect to any biodiesel which is produced outside
the United States for use as a fuel outside the United States.

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122 STAT. 3834

26 USC 6426.

Applicability.
26 USC 40 note.

PUBLIC LAW 110–343—OCT. 3, 2008

For purposes of this paragraph, the term ‘United States’
includes any possession of the United States.’’.
(c) EXCISE TAX CREDIT.—
(1) IN GENERAL.—Section 6426 is amended by adding at
the end the following new subsection:
‘‘(i) LIMITATION TO FUELS WITH CONNECTION TO THE UNITED
STATES.—
‘‘(1) ALCOHOL.—No credit shall be determined under this
section with respect to any alcohol which is produced outside
the United States for use as a fuel outside the United States.
‘‘(2) BIODIESEL AND ALTERNATIVE FUELS.—No credit shall
be determined under this section with respect to any biodiesel
or alternative fuel which is produced outside the United States
for use as a fuel outside the United States.
For purposes of this subsection, the term ‘United States’ includes
any possession of the United States.’’.
(2) CONFORMING AMENDMENT.—Subsection (e) of section
6427 is amended by redesignating paragraph (5) as paragraph
(6) and by inserting after paragraph (4) the following new
paragraph:
‘‘(5) LIMITATION TO FUELS WITH CONNECTION TO THE UNITED
STATES.—No amount shall be payable under paragraph (1) or
(2) with respect to any mixture or alternative fuel if credit
is not allowed with respect to such mixture or alternative
fuel by reason of section 6426(i).’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to claims for credit or payment made on or after May
15, 2008.

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SEC. 204. EXTENSION AND MODIFICATION OF ALTERNATIVE FUEL
CREDIT.

(a) EXTENSION.—
(1) ALTERNATIVE FUEL CREDIT.—Paragraph (4) of section
6426(d) (relating to alternative fuel credit) is amended by
striking ‘‘September 30, 2009’’ and inserting ‘‘December 31,
2009’’.
(2) ALTERNATIVE FUEL MIXTURE CREDIT.—Paragraph (3) of
section 6426(e) (relating to alternative fuel mixture credit) is
amended by striking ‘‘September 30, 2009’’ and inserting
‘‘December 31, 2009’’.
(3) PAYMENTS.—Subparagraph (C) of section 6427(e)(5)
(relating to termination) is amended by striking ‘‘September
30, 2009’’ and inserting ‘‘December 31, 2009’’.
(b) MODIFICATIONS.—
(1) ALTERNATIVE FUEL TO INCLUDE COMPRESSED OR
LIQUIFIED BIOMASS GAS.—Paragraph (2) of section 6426(d)
(relating to alternative fuel credit) is amended by striking ‘‘and’’
at the end of subparagraph (E), by redesignating subparagraph
(F) as subparagraph (G), and by inserting after subparagraph
(E) the following new subparagraph:
‘‘(F) compressed or liquefied gas derived from biomass
(as defined in section 45K(c)(3)), and’’.
(2) CREDIT ALLOWED FOR AVIATION USE OF FUEL.—Paragraph (1) of section 6426(d) is amended by inserting ‘‘sold
by the taxpayer for use as a fuel in aviation,’’ after ‘‘motorboat,’’.
(c) CARBON CAPTURE REQUIREMENT FOR CERTAIN FUELS.—

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(1) IN GENERAL.—Subsection (d) of section 6426, as
amended by subsection (a), is amended by redesignating paragraph (4) as paragraph (5) and by inserting after paragraph
(3) the following new paragraph:
‘‘(4) CARBON CAPTURE REQUIREMENT.—
‘‘(A) IN GENERAL.—The requirements of this paragraph
are met if the fuel is certified, under such procedures
as required by the Secretary, as having been derived from
coal produced at a gasification facility which separates
and sequesters not less than the applicable percentage
of such facility’s total carbon dioxide emissions.
‘‘(B) APPLICABLE PERCENTAGE.—For purposes of
subparagraph (A), the applicable percentage is—
‘‘(i) 50 percent in the case of fuel produced after
September 30, 2009, and on or before December 30,
2009, and
‘‘(ii) 75 percent in the case of fuel produced after
December 30, 2009.’’.
(2) CONFORMING AMENDMENT.—Subparagraph (E) of section
6426(d)(2) is amended by inserting ‘‘which meets the requirements of paragraph (4) and which is’’ after ‘‘any liquid fuel’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to fuel sold or used after the date of the enactment
of this Act.

Certification.

26 USC 6426.
26 USC 6426
note.

SEC. 205. CREDIT FOR NEW QUALIFIED PLUG-IN ELECTRIC DRIVE
MOTOR VEHICLES.

(a) PLUG-IN ELECTRIC DRIVE MOTOR VEHICLE CREDIT.—Subpart
B of part IV of subchapter A of chapter 1 (relating to other credits)
is amended by adding at the end the following new section:

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‘‘SEC.

30D.

NEW QUALIFIED
VEHICLES.

PLUG-IN

ELECTRIC

DRIVE

MOTOR

‘‘(a) ALLOWANCE OF CREDIT.—
‘‘(1) IN GENERAL.—There shall be allowed as a credit against
the tax imposed by this chapter for the taxable year an amount
equal to the applicable amount with respect to each new qualified plug-in electric drive motor vehicle placed in service by
the taxpayer during the taxable year.
‘‘(2) APPLICABLE AMOUNT.—For purposes of paragraph (1),
the applicable amount is sum of—
‘‘(A) $2,500, plus
‘‘(B) $417 for each kilowatt hour of traction battery
capacity in excess of 4 kilowatt hours.
‘‘(b) LIMITATIONS.—
‘‘(1) LIMITATION BASED ON WEIGHT.—The amount of the
credit allowed under subsection (a) by reason of subsection
(a)(2) shall not exceed—
‘‘(A) $7,500, in the case of any new qualified plugin electric drive motor vehicle with a gross vehicle weight
rating of not more than 10,000 pounds,
‘‘(B) $10,000, in the case of any new qualified plugin electric drive motor vehicle with a gross vehicle weight
rating of more than 10,000 pounds but not more than
14,000 pounds,
‘‘(C) $12,500, in the case of any new qualified plugin electric drive motor vehicle with a gross vehicle weight

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122 STAT. 3836

PUBLIC LAW 110–343—OCT. 3, 2008

rating of more than 14,000 pounds but not more than
26,000 pounds, and
‘‘(D) $15,000, in the case of any new qualified plugin electric drive motor vehicle with a gross vehicle weight
rating of more than 26,000 pounds.
‘‘(2) LIMITATION ON NUMBER OF PASSENGER VEHICLES AND
LIGHT TRUCKS ELIGIBLE FOR CREDIT.—
‘‘(A) IN GENERAL.—In the case of a new qualified plugin electric drive motor vehicle sold during the phaseout
period, only the applicable percentage of the credit otherwise allowable under subsection (a) shall be allowed.
‘‘(B) PHASEOUT PERIOD.—For purposes of this subsection, the phaseout period is the period beginning with
the second calendar quarter following the calendar quarter
which includes the first date on which the total number
of such new qualified plug-in electric drive motor vehicles
sold for use in the United States after December 31, 2008,
is at least 250,000.
‘‘(C) APPLICABLE PERCENTAGE.—For purposes of
subparagraph (A), the applicable percentage is—
‘‘(i) 50 percent for the first 2 calendar quarters
of the phaseout period,
‘‘(ii) 25 percent for the 3d and 4th calendar quarters of the phaseout period, and
‘‘(iii) 0 percent for each calendar quarter thereafter.
‘‘(D) CONTROLLED GROUPS.—Rules similar to the rules
of section 30B(f)(4) shall apply for purposes of this subsection.
‘‘(c) NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR
VEHICLE.—For purposes of this section, the term ‘new qualified
plug-in electric drive motor vehicle’ means a motor vehicle—
‘‘(1) which draws propulsion using a traction battery with
at least 4 kilowatt hours of capacity,
‘‘(2) which uses an offboard source of energy to recharge
such battery,
‘‘(3) which, in the case of a passenger vehicle or light
truck which has a gross vehicle weight rating of not more
than 8,500 pounds, has received a certificate of conformity
under the Clean Air Act and meets or exceeds the equivalent
qualifying California low emission vehicle standard under section 243(e)(2) of the Clean Air Act for that make and model
year, and
‘‘(A) in the case of a vehicle having a gross vehicle
weight rating of 6,000 pounds or less, the Bin 5 Tier
II emission standard established in regulations prescribed
by the Administrator of the Environmental Protection
Agency under section 202(i) of the Clean Air Act for that
make and model year vehicle, and
‘‘(B) in the case of a vehicle having a gross vehicle
weight rating of more than 6,000 pounds but not more
than 8,500 pounds, the Bin 8 Tier II emission standard
which is so established,
‘‘(4) the original use of which commences with the taxpayer,
‘‘(5) which is acquired for use or lease by the taxpayer
and not for resale, and
‘‘(6) which is made by a manufacturer.
‘‘(d) APPLICATION WITH OTHER CREDITS.—

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‘‘(1) BUSINESS CREDIT TREATED AS PART OF GENERAL BUSINESS CREDIT.—So much of the credit which would be allowed
under subsection (a) for any taxable year (determined without
regard to this subsection) that is attributable to property of
a character subject to an allowance for depreciation shall be
treated as a credit listed in section 38(b) for such taxable
year (and not allowed under subsection (a)).
‘‘(2) PERSONAL CREDIT.—
‘‘(A) IN GENERAL.—For purposes of this title, the credit
allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated
as a credit allowable under subpart A for such taxable
year.
‘‘(B) LIMITATION BASED ON AMOUNT OF TAX.—In the
case of a taxable year to which section 26(a)(2) does not
apply, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1))
shall not exceed the excess of—
‘‘(i) the sum of the regular tax liability (as defined
in section 26(b)) plus the tax imposed by section 55,
over
‘‘(ii) the sum of the credits allowable under subpart
A (other than this section and sections 23 and 25D)
and section 27 for the taxable year.
‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.—For purposes
of this section—
‘‘(1) MOTOR VEHICLE.—The term ‘motor vehicle’ has the
meaning given such term by section 30(c)(2).
‘‘(2) OTHER TERMS.—The terms ‘passenger automobile’,
‘light truck’, and ‘manufacturer’ have the meanings given such
terms in regulations prescribed by the Administrator of the
Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (42 U.S.C. 7521 et
seq.).
‘‘(3) TRACTION BATTERY CAPACITY.—Traction battery
capacity shall be measured in kilowatt hours from a 100 percent
state of charge to a zero percent state of charge.
‘‘(4) REDUCTION IN BASIS.—For purposes of this subtitle,
the basis of any property for which a credit is allowable under
subsection (a) shall be reduced by the amount of such credit
so allowed.
‘‘(5) NO DOUBLE BENEFIT.—The amount of any deduction
or other credit allowable under this chapter for a new qualified
plug-in electric drive motor vehicle shall be reduced by the
amount of credit allowed under subsection (a) for such vehicle
for the taxable year.
‘‘(6) PROPERTY USED BY TAX-EXEMPT ENTITY.—In the case
of a vehicle the use of which is described in paragraph (3)
or (4) of section 50(b) and which is not subject to a lease,
the person who sold such vehicle to the person or entity using
such vehicle shall be treated as the taxpayer that placed such
vehicle in service, but only if such person clearly discloses
to such person or entity in a document the amount of any
credit allowable under subsection (a) with respect to such
vehicle (determined without regard to subsection (b)(2)).
‘‘(7) PROPERTY USED OUTSIDE UNITED STATES, ETC., NOT
QUALIFIED.—No credit shall be allowable under subsection (a)

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122 STAT. 3838

Regulations.

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26 USC 30B.

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with respect to any property referred to in section 50(b)(1)
or with respect to the portion of the cost of any property
taken into account under section 179.
‘‘(8) RECAPTURE.—The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under
subsection (a) with respect to any property which ceases to
be property eligible for such credit (including recapture in the
case of a lease period of less than the economic life of a
vehicle).
‘‘(9) ELECTION TO NOT TAKE CREDIT.—No credit shall be
allowed under subsection (a) for any vehicle if the taxpayer
elects not to have this section apply to such vehicle.
‘‘(10) INTERACTION WITH AIR QUALITY AND MOTOR VEHICLE
SAFETY STANDARDS.—Unless otherwise provided in this section,
a motor vehicle shall not be considered eligible for a credit
under this section unless such vehicle is in compliance with—
‘‘(A) the applicable provisions of the Clean Air Act
for the applicable make and model year of the vehicle
(or applicable air quality provisions of State law in the
case of a State which has adopted such provision under
a waiver under section 209(b) of the Clean Air Act), and
‘‘(B) the motor vehicle safety provisions of sections
30101 through 30169 of title 49, United States Code.
‘‘(f) REGULATIONS.—
‘‘(1) IN GENERAL.—Except as provided in paragraph (2),
the Secretary shall promulgate such regulations as necessary
to carry out the provisions of this section.
‘‘(2) COORDINATION IN PRESCRIPTION OF CERTAIN REGULATIONS.—The Secretary of the Treasury, in coordination with
the Secretary of Transportation and the Administrator of the
Environmental Protection Agency, shall prescribe such regulations as necessary to determine whether a motor vehicle meets
the requirements to be eligible for a credit under this section.
‘‘(g) TERMINATION.—This section shall not apply to property
purchased after December 31, 2014.’’.
(b) COORDINATION WITH ALTERNATIVE MOTOR VEHICLE
CREDIT.—Section 30B(d)(3) is amended by adding at the end the
following new subparagraph:
‘‘(D) EXCLUSION OF PLUG-IN VEHICLES.—Any vehicle
with respect to which a credit is allowable under section
30D (determined without regard to subsection (d) thereof)
shall not be taken into account under this section.’’.
(c) CREDIT MADE PART OF GENERAL BUSINESS CREDIT.—Section
38(b), as amended by this Act, is amended by striking ‘‘plus’’ at
the end of paragraph (33), by striking the period at the end of
paragraph (34) and inserting ‘‘plus’’, and by adding at the end
the following new paragraph:
‘‘(35) the portion of the new qualified plug-in electric drive
motor vehicle credit to which section 30D(d)(1) applies.’’.
(d) CONFORMING AMENDMENTS.—
(1)(A) Section 24(b)(3)(B), as amended by section 106, is
amended by striking ‘‘and 25D’’ and inserting ‘‘25D, and 30D’’.
(B) Section 25(e)(1)(C)(ii) is amended by inserting ‘‘30D,’’
after ‘‘25D,’’.
(C) Section 25B(g)(2), as amended by section 106, is
amended by striking ‘‘and 25D’’ and inserting ‘‘, 25D, and
30D’’.

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(D) Section 26(a)(1), as amended by section 106, is amended
by striking ‘‘and 25D’’ and inserting ‘‘25D, and 30D’’.
(E) Section 1400C(d)(2) is amended by striking ‘‘and 25D’’
and inserting ‘‘25D, and 30D’’.
(2) Section 1016(a) is amended by striking ‘‘and’’ at the
end of paragraph (35), by striking the period at the end of
paragraph (36) and inserting ‘‘, and’’, and by adding at the
end the following new paragraph:
‘‘(37) to the extent provided in section 30D(e)(4).’’.
(3) Section 6501(m) is amended by inserting ‘‘30D(e)(9),’’
after ‘‘30C(e)(5),’’.
(4) The table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by adding at the end the
following new item:

26 USC 1400C.

‘‘Sec. 30D. New qualified plug-in electric drive motor vehicles.’’.

(e) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2008.
(f) APPLICATION OF EGTRRA SUNSET.—The amendment made
by subsection (d)(1)(A) shall be subject to title IX of the Economic
Growth and Tax Relief Reconciliation Act of 2001 in the same
manner as the provision of such Act to which such amendment
relates.

Applicability.
26 USC 24 note.
26 USC 24 note.

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

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

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SEC.

207.

ALTERNATIVE
CREDIT.

FUEL

VEHICLE

REFUELING

Applicability.
26 USC 4053
note.

PROPERTY

(a) EXTENSION OF CREDIT.—Paragraph (2) of section 30C(g)
is amended by striking ‘‘December 31, 2009’’ and inserting
‘‘December 31, 2010’’.
(b) INCLUSION OF ELECTRICITY AS A CLEAN-BURNING FUEL.—
Section 30C(c)(2) is amended by adding at the end the following
new subparagraph:
‘‘(C) Electricity.’’.

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122 STAT. 3840
Applicability.
26 USC 30C note.

PUBLIC LAW 110–343—OCT. 3, 2008

(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to property placed in service after the date of the
enactment of this Act, in taxable years ending after such date.
SEC. 208. CERTAIN INCOME AND GAINS RELATING TO ALCOHOL FUELS
AND MIXTURES, BIODIESEL FUELS AND MIXTURES, AND
ALTERNATIVE FUELS AND MIXTURES TREATED AS QUALIFYING INCOME FOR PUBLICLY TRADED PARTNERSHIPS.

26 USC 7704.

26 USC 7704
note.

(a) IN GENERAL.—Subparagraph (E) of section 7704(d)(1), as
amended by this Act, is amended by striking ‘‘or industrial source
carbon dioxide’’ and inserting ‘‘, industrial source carbon dioxide,
or the transportation or storage of any fuel described in subsection
(b), (c), (d), or (e) of section 6426, or any alcohol fuel defined
in section 6426(b)(4)(A) or any biodiesel fuel as defined in section
40A(d)(1)’’ after ‘‘timber)’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall take effect on the date of the enactment of this Act, in
taxable years ending after such date.
SEC. 209. EXTENSION AND MODIFICATION OF ELECTION TO EXPENSE
CERTAIN REFINERIES.

Applicability.
26 USC 179C
note.

(a) EXTENSION.—Paragraph (1) of section 179C(c) (relating to
qualified refinery property) is amended—
(1) by striking ‘‘January 1, 2012’’ in subparagraph (B)
and inserting ‘‘January 1, 2014’’, and
(2) by striking ‘‘January 1, 2008’’ each place it appears
in subparagraph (F) and inserting ‘‘January 1, 2010’’.
(b) INCLUSION OF FUEL DERIVED FROM SHALE AND TAR SANDS.—
(1) IN GENERAL.—Subsection (d) of section 179C is amended
by inserting ‘‘, or directly from shale or tar sands’’ after ‘‘(as
defined in section 45K(c))’’.
(2) CONFORMING AMENDMENT.—Paragraph (2) of section
179C(e) is amended by inserting ‘‘shale, tar sands, or’’ before
‘‘qualified fuels’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to property placed in service after the date of the
enactment of this Act.
SEC. 210. EXTENSION OF SUSPENSION OF TAXABLE INCOME LIMIT
ON PERCENTAGE DEPLETION FOR OIL AND NATURAL GAS
PRODUCED FROM MARGINAL PROPERTIES.

Subparagraph (H) of section 613A(c)(6) (relating to oil and
gas produced from marginal properties) is amended by striking
‘‘for any taxable year’’ and all that follows and inserting ‘‘for any
taxable year—
‘‘(i) beginning after December 31, 1997, and before
January 1, 2008, or
‘‘(ii) beginning after December 31, 2008, and before
January 1, 2010.’’.

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SEC. 211. TRANSPORTATION FRINGE BENEFIT TO BICYCLE COMMUTERS.

(a) IN GENERAL.—Paragraph (1) of section 132(f) is amended
by adding at the end the following:
‘‘(D) Any qualified bicycle commuting reimbursement.’’.
(b) LIMITATION ON EXCLUSION.—Paragraph (2) of section 132(f)
is amended by striking ‘‘and’’ at the end of subparagraph (A),

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by striking the period at the end of subparagraph (B) and inserting
‘‘, and’’, and by adding at the end the following new subparagraph:
‘‘(C) the applicable annual limitation in the case of
any qualified bicycle commuting reimbursement.’’.
(c) DEFINITIONS.—Paragraph (5) of section 132(f) is amended
by adding at the end the following:
‘‘(F) DEFINITIONS RELATED TO BICYCLE COMMUTING
REIMBURSEMENT.—
‘‘(i) QUALIFIED BICYCLE COMMUTING REIMBURSEMENT.—The
term ‘qualified bicycle commuting
reimbursement’ means, with respect to any calendar
year, any employer reimbursement during the 15month period beginning with the first day of such
calendar year for reasonable expenses incurred by the
employee during such calendar year for the purchase
of a bicycle and bicycle improvements, repair, and storage, if such bicycle is regularly used for travel between
the employee’s residence and place of employment.
‘‘(ii) APPLICABLE ANNUAL LIMITATION.—The term
‘applicable annual limitation’ means, with respect to
any employee for any calendar year, the product of
$20 multiplied by the number of qualified bicycle commuting months during such year.
‘‘(iii) QUALIFIED BICYCLE COMMUTING MONTH.—The
term ‘qualified bicycle commuting month’ means, with
respect to any employee, any month during which such
employee—
‘‘(I) regularly uses the bicycle for a substantial
portion of the travel between the employee’s residence and place of employment, and
‘‘(II) does not receive any benefit described
in subparagraph (A), (B), or (C) of paragraph (1).’’.
(d) CONSTRUCTIVE RECEIPT OF BENEFIT.—Paragraph (4) of section 132(f) is amended by inserting ‘‘(other than a qualified bicycle
commuting reimbursement)’’ after ‘‘qualified transportation fringe’’.
(e) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2008.

26 USC 132.

Applicability.
26 USC 132 note.

TITLE III—ENERGY CONSERVATION
AND EFFICIENCY PROVISIONS
SEC. 301. QUALIFIED ENERGY CONSERVATION BONDS.

(a) IN GENERAL.—Subpart I of part IV of subchapter A of
chapter 1, as amended by section 107, is amended by adding at
the end the following new section:

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

‘‘(a) QUALIFIED ENERGY CONSERVATION BOND.—For purposes
of this subchapter, the term ‘qualified energy conservation bond’
means any bond issued as part of an issue if—
‘‘(1) 100 percent of the available project proceeds of such
issue are to be used for one or more qualified conservation
purposes,
‘‘(2) the bond is issued by a State or local government,
and

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122 STAT. 3842

PUBLIC LAW 110–343—OCT. 3, 2008

‘‘(3) the issuer designates such bond for purposes of this
section.
‘‘(b) REDUCED CREDIT AMOUNT.—The annual credit determined
under section 54A(b) with respect to any qualified energy conservation bond shall be 70 percent of the amount so determined without
regard to this subsection.
‘‘(c) LIMITATION ON AMOUNT OF BONDS DESIGNATED.—The maximum aggregate face amount of bonds which may be designated
under subsection (a) by any issuer shall not exceed the limitation
amount allocated to such issuer under subsection (e).
‘‘(d) NATIONAL LIMITATION ON AMOUNT OF BONDS DESIGNATED.—There is a national qualified energy conservation bond
limitation of $800,000,000.
‘‘(e) ALLOCATIONS.—
‘‘(1) IN GENERAL.—The limitation applicable under subsection (d) shall be allocated by the Secretary among the States
in proportion to the population of the States.
‘‘(2) ALLOCATIONS TO LARGEST LOCAL GOVERNMENTS.—
‘‘(A) IN GENERAL.—In the case of any State in which
there is a large local government, each such local government shall be allocated a portion of such State’s allocation
which bears the same ratio to the State’s allocation (determined without regard to this subparagraph) as the population of such large local government bears to the population of such State.
‘‘(B) ALLOCATION OF UNUSED LIMITATION TO STATE.—
The amount allocated under this subsection to a large
local government may be reallocated by such local government to the State in which such local government is located.
‘‘(C) LARGE LOCAL GOVERNMENT.—For purposes of this
section, the term ‘large local government’ means any
municipality or county if such municipality or county has
a population of 100,000 or more.
‘‘(3) ALLOCATION TO ISSUERS; RESTRICTION ON PRIVATE
ACTIVITY BONDS.—Any allocation under this subsection to a
State or large local government shall be allocated by such
State or large local government to issuers within the State
in a manner that results in not less than 70 percent of the
allocation to such State or large local government being used
to designate bonds which are not private activity bonds.
‘‘(f) QUALIFIED CONSERVATION PURPOSE.—For purposes of this
section—
‘‘(1) IN GENERAL.—The term ‘qualified conservation purpose’
means any of the following:
‘‘(A) Capital expenditures incurred for purposes of—
‘‘(i) reducing energy consumption in publicly-owned
buildings by at least 20 percent,
‘‘(ii) implementing green community programs,
‘‘(iii) rural development involving the production
of electricity from renewable energy resources, or
‘‘(iv) any qualified facility (as determined under
section 45(d) without regard to paragraphs (8) and
(10) thereof and without regard to any placed in service
date).
‘‘(B) Expenditures with respect to research facilities,
and research grants, to support research in—

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3843

‘‘(i) development of cellulosic ethanol or other nonfossil fuels,
‘‘(ii) technologies for the capture and sequestration
of carbon dioxide produced through the use of fossil
fuels,
‘‘(iii) increasing the efficiency of existing technologies for producing nonfossil fuels,
‘‘(iv) automobile battery technologies and other
technologies to reduce fossil fuel consumption in
transportation, or
‘‘(v) technologies to reduce energy use in buildings.
‘‘(C) Mass commuting facilities and related facilities
that reduce the consumption of energy, including expenditures to reduce pollution from vehicles used for mass commuting.
‘‘(D) Demonstration projects designed to promote the
commercialization of—
‘‘(i) green building technology,
‘‘(ii) conversion of agricultural waste for use in
the production of fuel or otherwise,
‘‘(iii) advanced battery manufacturing technologies,
‘‘(iv) technologies to reduce peak use of electricity,
or
‘‘(v) technologies for the capture and sequestration
of carbon dioxide emitted from combusting fossil fuels
in order to produce electricity.
‘‘(E) Public education campaigns to promote energy
efficiency.
‘‘(2) SPECIAL RULES FOR PRIVATE ACTIVITY BONDS.—For purposes of this section, in the case of any private activity bond,
the term ‘qualified conservation purposes’ shall not include
any expenditure which is not a capital expenditure.
‘‘(g) POPULATION.—
‘‘(1) IN GENERAL.—The population of any State or local
government shall be determined for purposes of this section
as provided in section 146(j) for the calendar year which
includes the date of the enactment of this section.
‘‘(2) SPECIAL RULE FOR COUNTIES.—In determining the
population of any county for purposes of this section, any population of such county which is taken into account in determining
the population of any municipality which is a large local government shall not be taken into account in determining the population of such county.
‘‘(h) APPLICATION TO INDIAN TRIBAL GOVERNMENTS.—An Indian
tribal government shall be treated for purposes of this section
in the same manner as a large local government, except that—
‘‘(1) an Indian tribal government shall be treated for purposes of subsection (e) as located within a State to the extent
of so much of the population of such government as resides
within such State, and
‘‘(2) any bond issued by an Indian tribal government shall
be treated as a qualified energy conservation bond only if
issued as part of an issue the available project proceeds of
which are used for purposes for which such Indian tribal
government could issue bonds to which section 103(a) applies.’’.
(b) CONFORMING AMENDMENTS.—

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122 STAT. 3844

PUBLIC LAW 110–343—OCT. 3, 2008
(1) Paragraph (1) of section 54A(d), as amended by this
Act, is amended to read as follows:
‘‘(1) QUALIFIED TAX CREDIT BOND.—The term ‘qualified tax
credit bond’ means—
‘‘(A) a qualified forestry conservation bond,
‘‘(B) a new clean renewable energy bond, or
‘‘(C) a qualified energy conservation bond,
which is part of an issue that meets requirements of paragraphs
(2), (3), (4), (5), and (6).’’.
(2) Subparagraph (C) of section 54A(d)(2), as amended by
this Act, is amended to read as follows:
‘‘(C) QUALIFIED PURPOSE.—For purposes of this paragraph, the term ‘qualified purpose’ means—
‘‘(i) in the case of a qualified forestry conservation
bond, a purpose specified in section 54B(e),
‘‘(ii) in the case of a new clean renewable energy
bond, a purpose specified in section 54C(a)(1), and
‘‘(iii) in the case of a qualified energy conservation
bond, a purpose specified in section 54D(a)(1).’’.
(3) The table of sections for subpart I of part IV of subchapter A of chapter 1, as amended by this Act, is amended
by adding at the end the following new item:

‘‘Sec. 54D. Qualified energy conservation bonds.’’.
Applicability.
26 USC 54A note.

(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to obligations issued after the date of the enactment
of this Act.

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SEC. 302. CREDIT FOR NONBUSINESS ENERGY PROPERTY.

(a) EXTENSION OF CREDIT.—Section 25C(g) is amended by
striking ‘‘placed in service after December 31, 2007’’ and inserting
‘‘placed in service—
‘‘(1) after December 31, 2007, and before January 1, 2009,
or
‘‘(2) after December 31, 2009.’’.
(b) QUALIFIED BIOMASS FUEL PROPERTY.—
(1) IN GENERAL.—Section 25C(d)(3) is amended—
(A) by striking ‘‘and’’ at the end of subparagraph (D),
(B) by striking the period at the end of subparagraph
(E) and inserting ‘‘, and’’, and
(C) by adding at the end the following new subparagraph:
‘‘(F) a stove which uses the burning of biomass fuel
to heat a dwelling unit located in the United States and
used as a residence by the taxpayer, or to heat water
for use in such a dwelling unit, and which has a thermal
efficiency rating of at least 75 percent.’’.
(2) BIOMASS FUEL.—Section 25C(d) is amended by adding
at the end the following new paragraph:
‘‘(6) BIOMASS FUEL.—The term ‘biomass fuel’ means any
plant-derived fuel available on a renewable or recurring basis,
including agricultural crops and trees, wood and wood waste
and residues (including wood pellets), plants (including aquatic
plants), grasses, residues, and fibers.’’.
(c) MODIFICATION OF WATER HEATER REQUIREMENTS.—Section
25C(d)(3)(E) is amended by inserting ‘‘or a thermal efficiency of
at least 90 percent’’ after ‘‘0.80’’.

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122 STAT. 3845

(d) COORDINATION WITH CREDIT FOR QUALIFIED GEOTHERMAL
HEAT PUMP PROPERTY EXPENDITURES.—
(1) IN GENERAL.—Paragraph (3) of section 25C(d), as
amended by subsections (b) and (c), is amended by striking
subparagraph (C) and by redesignating subparagraphs (D), (E),
and (F) as subparagraphs (C), (D), and (E), respectively.
(2) CONFORMING AMENDMENT.—Subparagraph (C) of section
25C(d)(2) is amended to read as follows:
‘‘(C) REQUIREMENTS AND STANDARDS FOR AIR CONDITIONERS AND HEAT PUMPS.—The standards and requirements prescribed by the Secretary under subparagraph
(B) with respect to the energy efficiency ratio (EER) for
central air conditioners and electric heat pumps—
‘‘(i) shall require measurements to be based on
published data which is tested by manufacturers at
95 degrees Fahrenheit, and
‘‘(ii) may be based on the certified data of the
Air Conditioning and Refrigeration Institute that are
prepared in partnership with the Consortium for
Energy Efficiency.’’.
(e) MODIFICATION OF QUALIFIED ENERGY EFFICIENCY IMPROVEMENTS.—
(1) IN GENERAL.—Paragraph (1) of section 25C(c) is
amended by inserting ‘‘, or an asphalt roof with appropriate
cooling granules,’’ before ‘‘which meet the Energy Star program
requirements’’.
(2) BUILDING ENVELOPE COMPONENT.—Subparagraph (D)
of section 25C(c)(2) is amended—
(A) by inserting ‘‘or asphalt roof’’ after ‘‘metal roof’’,
and
(B) by inserting ‘‘or cooling granules’’ after ‘‘pigmented
coatings’’.
(f) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendments made this section shall apply to expenditures
made after December 31, 2008.
(2) MODIFICATION OF QUALIFIED ENERGY EFFICIENCY
IMPROVEMENTS.—The amendments made by subsection (e) shall
apply to property placed in service after the date of the enactment of this Act.

Public
information.

26 USC 25C.

Applicability.
26 USC 25C note.

SEC. 303. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

Subsection (h) of section 179D is amended by striking
‘‘December 31, 2008’’ and inserting ‘‘December 31, 2013’’.
SEC. 304. NEW ENERGY EFFICIENT HOME CREDIT.

Subsection (g) of section 45L (relating to termination) is
amended by striking ‘‘December 31, 2008’’ and inserting ‘‘December
31, 2009’’.

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

(a) IN GENERAL.—Subsection (b) of section 45M is amended
to read as follows:
‘‘(b) APPLICABLE AMOUNT.—For purposes of subsection (a)—
‘‘(1) DISHWASHERS.—The applicable amount is—
‘‘(A) $45 in the case of a dishwasher which is manufactured in calendar year 2008 or 2009 and which uses no

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122 STAT. 3846

more than 324 kilowatt hours per year and 5.8 gallons
per cycle, and
‘‘(B) $75 in the case of a dishwasher which is manufactured in calendar year 2008, 2009, or 2010 and which
uses no more than 307 kilowatt hours per year and 5.0
gallons per cycle (5.5 gallons per cycle for dishwashers
designed for greater than 12 place settings).
‘‘(2) CLOTHES WASHERS.—The applicable amount is—
‘‘(A) $75 in the case of a residential top-loading clothes
washer manufactured in calendar year 2008 which meets
or exceeds a 1.72 modified energy factor and does not
exceed a 8.0 water consumption factor,
‘‘(B) $125 in the case of a residential top-loading clothes
washer manufactured in calendar year 2008 or 2009 which
meets or exceeds a 1.8 modified energy factor and does
not exceed a 7.5 water consumption factor,
‘‘(C) $150 in the case of a residential or commercial
clothes washer manufactured in calendar year 2008, 2009,
or 2010 which meets or exceeds 2.0 modified energy factor
and does not exceed a 6.0 water consumption factor, and
‘‘(D) $250 in the case of a residential or commercial
clothes washer manufactured in calendar year 2008, 2009,
or 2010 which meets or exceeds 2.2 modified energy factor
and does not exceed a 4.5 water consumption factor.
‘‘(3) REFRIGERATORS.—The applicable amount is—
‘‘(A) $50 in the case of a refrigerator which is manufactured in calendar year 2008, and consumes at least 20
percent but not more than 22.9 percent less kilowatt hours
per year than the 2001 energy conservation standards,
‘‘(B) $75 in the case of a refrigerator which is manufactured in calendar year 2008 or 2009, and consumes at
least 23 percent but no more than 24.9 percent less kilowatt
hours per year than the 2001 energy conservation standards,
‘‘(C) $100 in the case of a refrigerator which is manufactured in calendar year 2008, 2009, or 2010, and consumes at least 25 percent but not more than 29.9 percent
less kilowatt hours per year than the 2001 energy conservation standards, and
‘‘(D) $200 in the case of a refrigerator manufactured
in calendar year 2008, 2009, or 2010 and which consumes
at least 30 percent less energy than the 2001 energy conservation standards.’’.
(b) ELIGIBLE PRODUCTION.—
(1) SIMILAR TREATMENT FOR ALL APPLIANCES.—Subsection
(c) of section 45M is amended—
(A) by striking paragraph (2),
(B) by striking ‘‘(1) IN GENERAL’’ and all that follows
through ‘‘the eligible’’ and inserting ‘‘The eligible’’,
(C) by moving the text of such subsection in line with
the subsection heading, and
(D) by redesignating subparagraphs (A) and (B) as
paragraphs (1) and (2), respectively, and by moving such
paragraphs 2 ems to the left.
(2) MODIFICATION OF BASE PERIOD.—Paragraph (2) of section 45M(c), as amended by paragraph (1), is amended by
striking ‘‘3-calendar year’’ and inserting ‘‘2-calendar year’’.

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26 USC 45M.

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3847

(c) TYPES OF ENERGY EFFICIENT APPLIANCES.—Subsection (d)
of section 45M is amended to read as follows:
‘‘(d) TYPES OF ENERGY EFFICIENT APPLIANCE.—For purposes
of this section, the types of energy efficient appliances are—
‘‘(1) dishwashers described in subsection (b)(1),
‘‘(2) clothes washers described in subsection (b)(2), and
‘‘(3) refrigerators described in subsection (b)(3).’’.
(d) AGGREGATE CREDIT AMOUNT ALLOWED.—
(1) INCREASE IN LIMIT.—Paragraph (1) of section 45M(e)
is amended to read as follows:
‘‘(1) AGGREGATE CREDIT AMOUNT ALLOWED.—The aggregate
amount of credit allowed under subsection (a) with respect
to a taxpayer for any taxable year shall not exceed $75,000,000
reduced by the amount of the credit allowed under subsection
(a) to the taxpayer (or any predecessor) for all prior taxable
years beginning after December 31, 2007.’’.
(2) EXCEPTION FOR CERTAIN REFRIGERATOR AND CLOTHES
WASHERS.—Paragraph (2) of section 45M(e) is amended to read
as follows:
‘‘(2) AMOUNT ALLOWED FOR CERTAIN REFRIGERATORS AND
CLOTHES WASHERS.—Refrigerators described in subsection
(b)(3)(D) and clothes washers described in subsection (b)(2)(D)
shall not be taken into account under paragraph (1).’’.
(e) QUALIFIED ENERGY EFFICIENT APPLIANCES.—
(1) IN GENERAL.—Paragraph (1) of section 45M(f) is
amended to read as follows:
‘‘(1) QUALIFIED ENERGY EFFICIENT APPLIANCE.—The term
‘qualified energy efficient appliance’ means—
‘‘(A) any dishwasher described in subsection (b)(1),
‘‘(B) any clothes washer described in subsection (b)(2),
and
‘‘(C) any refrigerator described in subsection (b)(3).’’.
(2) CLOTHES WASHER.—Section 45M(f)(3) is amended by
inserting ‘‘commercial’’ before ‘‘residential’’ the second place
it appears.
(3) TOP-LOADING CLOTHES WASHER.—Subsection (f) of section 45M is amended by redesignating paragraphs (4), (5),
(6), and (7) as paragraphs (5), (6), (7), and (8), respectively,
and by inserting after paragraph (3) the following new paragraph:
‘‘(4) TOP-LOADING CLOTHES WASHER.—The term ‘top-loading
clothes washer’ means a clothes washer which has the clothes
container compartment access located on the top of the machine
and which operates on a vertical axis.’’.
(4) REPLACEMENT OF ENERGY FACTOR.—Section 45M(f)(6),
as redesignated by paragraph (3), is amended to read as follows:
‘‘(6) MODIFIED ENERGY FACTOR.—The term ‘modified energy
factor’ means the modified energy factor established by the
Department of Energy for compliance with the Federal energy
conservation standard.’’.
(5) GALLONS PER CYCLE; WATER CONSUMPTION FACTOR.—
Section 45M(f), as amended by paragraph (3), is amended by
adding at the end the following:
‘‘(9) GALLONS PER CYCLE.—The term ‘gallons per cycle’
means, with respect to a dishwasher, the amount of water,
expressed in gallons, required to complete a normal cycle of
a dishwasher.

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Applicability.
26 USC 45M
note.

PUBLIC LAW 110–343—OCT. 3, 2008

‘‘(10) WATER CONSUMPTION FACTOR.—The term ‘water
consumption factor’ means, with respect to a clothes washer,
the quotient of the total weighted per-cycle water consumption
divided by the cubic foot (or liter) capacity of the clothes
washer.’’.
(f) EFFECTIVE DATE.—The amendments made by this section
shall apply to appliances produced after December 31, 2007.

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

(a) IN GENERAL.—Section 168(e)(3)(D) is amended by striking
‘‘and’’ at the end of clause (i), by striking the period at the end
of clause (ii) and inserting a comma, and by inserting after clause
(ii) the following new clauses:
‘‘(iii) any qualified smart electric meter, and
‘‘(iv) any qualified smart electric grid system.’’.
(b) DEFINITIONS.—Section 168(i) is amended by inserting at
the end the following new paragraph:
‘‘(18) QUALIFIED SMART ELECTRIC METERS.—
‘‘(A) IN GENERAL.—The term ‘qualified smart electric
meter’ means any smart electric meter which—
‘‘(i) is placed in service by a taxpayer who is a
supplier of electric energy or a provider of electric
energy services, and
‘‘(ii) does not have a class life (determined without
regard to subsection (e)) of less than 10 years.
‘‘(B) SMART ELECTRIC METER.—For purposes of subparagraph (A), the term ‘smart electric meter’ means any timebased meter and related communication equipment which
is capable of being used by the taxpayer as part of a
system that—
‘‘(i) measures and records electricity usage data
on a time-differentiated basis in at least 24 separate
time segments per day,
‘‘(ii) provides for the exchange of information
between supplier or provider and the customer’s electric meter in support of time-based rates or other forms
of demand response,
‘‘(iii) provides data to such supplier or provider
so that the supplier or provider can provide energy
usage information to customers electronically, and
‘‘(iv) provides net metering.
‘‘(19) QUALIFIED SMART ELECTRIC GRID SYSTEMS.—
‘‘(A) IN GENERAL.—The term ‘qualified smart electric
grid system’ means any smart grid property which—
‘‘(i) is used as part of a system for electric distribution grid communications, monitoring, and management placed in service by a taxpayer who is a supplier
of electric energy or a provider of electric energy services, and
‘‘(ii) does not have a class life (determined without
regard to subsection (e)) of less than 10 years.
‘‘(B) SMART GRID PROPERTY.—For the purposes of
subparagraph (A), the term ‘smart grid property’ means
electronics and related equipment that is capable of—
‘‘(i) sensing, collecting, and monitoring data of or
from all portions of a utility’s electric distribution grid,

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‘‘(ii) providing real-time, two-way communications
to monitor or manage such grid, and
‘‘(iii) providing real time analysis of and event
prediction based upon collected data that can be used
to improve electric distribution system reliability,
quality, and performance.’’.
(c) CONTINUED APPLICATION OF 150 PERCENT DECLINING BALANCE METHOD.—Paragraph (2) of section 168(b) is amended by
striking ‘‘or’’ at the end of subparagraph (B), by redesignating
subparagraph (C) as subparagraph (D), and by inserting after
subparagraph (B) the following new subparagraph:
‘‘(C) any property (other than property described in
paragraph (3)) which is a qualified smart electric meter
or qualified smart electric grid system, or’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to property placed in service after the date of the
enactment of this Act.

26 USC 168.

Applicability.
26 USC 168 note.

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

(a) IN GENERAL.—Paragraph (8) of section 142(l) is amended
by striking ‘‘September 30, 2009’’ and inserting ‘‘September 30,
2012’’.
(b) TREATMENT OF CURRENT REFUNDING BONDS.—Paragraph
(9) of section 142(l) is amended by striking ‘‘October 1, 2009’’ and
inserting ‘‘October 1, 2012’’.
(c) ACCOUNTABILITY.—The second sentence of section 701(d)
of the American Jobs Creation Act of 2004 is amended by striking
‘‘issuance,’’ and inserting ‘‘issuance of the last issue with respect
to such project,’’.

26 USC 142 note.

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

(a) IN GENERAL.—Section 168 is amended by adding at the
end the following new subsection:
‘‘(m) SPECIAL ALLOWANCE FOR CERTAIN REUSE AND RECYCLING
PROPERTY.—
‘‘(1) IN GENERAL.—In the case of any qualified reuse and
recycling property—
‘‘(A) the depreciation deduction provided by section
167(a) for the taxable year in which such property is placed
in service shall include an allowance equal to 50 percent
of the adjusted basis of the qualified reuse and recycling
property, and
‘‘(B) the adjusted basis of the qualified reuse and
recycling property shall be reduced by the amount of such
deduction before computing the amount otherwise allowable as a depreciation deduction under this chapter for
such taxable year and any subsequent taxable year.
‘‘(2) QUALIFIED REUSE AND RECYCLING PROPERTY.—For purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘qualified reuse and
recycling property’ means any reuse and recycling property—
‘‘(i) to which this section applies,
‘‘(ii) which has a useful life of at least 5 years,
‘‘(iii) the original use of which commences with
the taxpayer after August 31, 2008, and

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Effective dates.

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‘‘(iv) which is—
‘‘(I) acquired by purchase (as defined in section
179(d)(2)) by the taxpayer after August 31, 2008,
but only if no written binding contract for the
acquisition was in effect before September 1, 2008,
or
‘‘(II) acquired by the taxpayer pursuant to a
written binding contract which was entered into
after August 31, 2008.
‘‘(B) EXCEPTIONS.—
‘‘(i) BONUS DEPRECIATION PROPERTY UNDER SUBSECTION (k).—The term ‘qualified reuse and recycling
property’ shall not include any property to which section 168(k) applies.
‘‘(ii) ALTERNATIVE DEPRECIATION PROPERTY.—The
term ‘qualified reuse and recycling property’ shall not
include any property to which the alternative depreciation system under subsection (g) applies, determined
without regard to paragraph (7) of subsection (g)
(relating to election to have system apply).
‘‘(iii) ELECTION OUT.—If a taxpayer makes an election under this clause with respect to any class of
property for any taxable year, this subsection shall
not apply to all property in such class placed in service
during such taxable year.
‘‘(C) SPECIAL RULE FOR SELF-CONSTRUCTED PROPERTY.—
In the case of a taxpayer manufacturing, constructing,
or producing property for the taxpayer’s own use, the
requirements of clause (iv) of subparagraph (A) shall be
treated as met if the taxpayer begins manufacturing, constructing, or producing the property after August 31, 2008.
‘‘(D) DEDUCTION ALLOWED IN COMPUTING MINIMUM
TAX.—For purposes of determining alternative minimum
taxable income under section 55, the deduction under subsection (a) for qualified reuse and recycling property shall
be determined under this section without regard to any
adjustment under section 56.
‘‘(3) DEFINITIONS.—For purposes of this subsection—
‘‘(A) REUSE AND RECYCLING PROPERTY.—
‘‘(i) IN GENERAL.—The term ‘reuse and recycling
property’ means any machinery and equipment (not
including buildings or real estate), along with all
appurtenances thereto, including software necessary
to operate such equipment, which is used exclusively
to collect, distribute, or recycle qualified reuse and
recyclable materials.
‘‘(ii) EXCLUSION.—Such term does not include
rolling stock or other equipment used to transport
reuse and recyclable materials.
‘‘(B) QUALIFIED REUSE AND RECYCLABLE MATERIALS.—
‘‘(i) IN GENERAL.—The term ‘qualified reuse and
recyclable materials’ means scrap plastic, scrap glass,
scrap textiles, scrap rubber, scrap packaging, recovered
fiber, scrap ferrous and nonferrous metals, or electronic
scrap generated by an individual or business.
‘‘(ii) ELECTRONIC SCRAP.—For purposes of clause
(i), the term ‘electronic scrap’ means—

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‘‘(I) any cathode ray tube, flat panel screen,
or similar video display device with a screen size
greater than 4 inches measured diagonally, or
‘‘(II) any central processing unit.
‘‘(C) RECYCLING OR RECYCLE.—The term ‘recycling’ or
‘recycle’ means that process (including sorting) by which
worn or superfluous materials are manufactured or processed into specification grade commodities that are suitable
for use as a replacement or substitute for virgin materials
in manufacturing tangible consumer and commercial products, including packaging.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to property placed in service after August 31, 2008.

Applicability.
26 USC 168 note.

TITLE IV—REVENUE PROVISIONS
SEC. 401. LIMITATION OF DEDUCTION FOR INCOME ATTRIBUTABLE
TO DOMESTIC PRODUCTION OF OIL, GAS, OR PRIMARY
PRODUCTS THEREOF.

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(a) IN GENERAL.—Section 199(d) is amended by redesignating
paragraph (9) as paragraph (10) and by inserting after paragraph
(8) the following new paragraph:
‘‘(9) SPECIAL RULE FOR TAXPAYERS WITH OIL RELATED QUALIFIED PRODUCTION ACTIVITIES INCOME.—
‘‘(A) IN GENERAL.—If a taxpayer has oil related qualified production activities income for any taxable year beginning after 2009, the amount otherwise allowable as a
deduction under subsection (a) shall be reduced by 3 percent of the least of—
‘‘(i) the oil related qualified production activities
income of the taxpayer for the taxable year,
‘‘(ii) the qualified production activities income of
the taxpayer for the taxable year, or
‘‘(iii) taxable income (determined without regard
to this section).
‘‘(B) OIL RELATED QUALIFIED PRODUCTION ACTIVITIES
INCOME.—For purposes of this paragraph, the term ‘oil
related qualified production activities income’ means for
any taxable year the qualified production activities income
which is attributable to the production, refining, processing,
transportation, or distribution of oil, gas, or any primary
product thereof during such taxable year.
‘‘(C) PRIMARY PRODUCT.—For purposes of this paragraph, the term ‘primary product’ has the same meaning
as when used in section 927(a)(2)(C), as in effect before
its repeal.’’.
(b) CONFORMING AMENDMENT.—Section 199(d)(2) (relating to
application to individuals) is amended by striking ‘‘subsection
(a)(1)(B)’’ and inserting ‘‘subsections (a)(1)(B) and (d)(9)(A)(iii)’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2008.

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26 USC 199.

Applicability.
26 USC 199 note.

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PUBLIC LAW 110–343—OCT. 3, 2008

SEC. 402. ELIMINATION OF THE DIFFERENT TREATMENT OF FOREIGN
OIL AND GAS EXTRACTION INCOME AND FOREIGN OIL
RELATED INCOME FOR PURPOSES OF THE FOREIGN TAX
CREDIT.
26 USC 907.

(a) IN GENERAL.—Subsections (a) and (b) of section 907 (relating
to special rules in case of foreign oil and gas income) are amended
to read as follows:
‘‘(a) REDUCTION IN AMOUNT ALLOWED AS FOREIGN TAX UNDER
SECTION 901.—In applying section 901, the amount of any foreign
oil and gas taxes paid or accrued (or deemed to have been paid)
during the taxable year which would (but for this subsection) be
taken into account for purposes of section 901 shall be reduced
by the amount (if any) by which the amount of such taxes exceeds
the product of—
‘‘(1) the amount of the combined foreign oil and gas income
for the taxable year,
‘‘(2) multiplied by—
‘‘(A) in the case of a corporation, the percentage which
is equal to the highest rate of tax specified under section
11(b), or
‘‘(B) in the case of an individual, a fraction the numerator of which is the tax against which the credit under
section 901(a) is taken and the denominator of which is
the taxpayer’s entire taxable income.
‘‘(b) COMBINED FOREIGN OIL AND GAS INCOME; FOREIGN OIL
AND GAS TAXES.—For purposes of this section—
‘‘(1) COMBINED FOREIGN OIL AND GAS INCOME.—The term
‘combined foreign oil and gas income’ means, with respect to
any taxable year, the sum of—
‘‘(A) foreign oil and gas extraction income, and
‘‘(B) foreign oil related income.
‘‘(2) FOREIGN OIL AND GAS TAXES.—The term ‘foreign oil
and gas taxes’ means, with respect to any taxable year, the
sum of—
‘‘(A) oil and gas extraction taxes, and
‘‘(B) any income, war profits, and excess profits taxes
paid or accrued (or deemed to have been paid or accrued
under section 902 or 960) during the taxable year with
respect to foreign oil related income (determined without
regard to subsection (c)(4)) or loss which would be taken
into account for purposes of section 901 without regard
to this section.’’.
(b) RECAPTURE OF FOREIGN OIL AND GAS LOSSES.—Paragraph
(4) of section 907(c) (relating to recapture of foreign oil and gas
extraction losses by recharacterizing later extraction income) is
amended to read as follows:
‘‘(4) RECAPTURE OF FOREIGN OIL AND GAS LOSSES BY RE-

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CHARACTERIZING LATER COMBINED FOREIGN OIL AND GAS
INCOME.—
‘‘(A) IN GENERAL.—The combined foreign oil and gas

income of a taxpayer for a taxable year (determined without
regard to this paragraph) shall be reduced—
‘‘(i) first by the amount determined under subparagraph (B), and
‘‘(ii) then by the amount determined under
subparagraph (C).

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122 STAT. 3853

The aggregate amount of such reductions shall be treated
as income (from sources without the United States) which
is not combined foreign oil and gas income.
‘‘(B) REDUCTION FOR PRE-2009 FOREIGN OIL EXTRACTION
LOSSES.—The reduction under this paragraph shall be
equal to the lesser of—
‘‘(i) the foreign oil and gas extraction income of
the taxpayer for the taxable year (determined without
regard to this paragraph), or
‘‘(ii) the excess of—
‘‘(I) the aggregate amount of foreign oil extraction losses for preceding taxable years beginning
after December 31, 1982, and before January 1,
2009, over
‘‘(II) so much of such aggregate amount as
was recharacterized under this paragraph (as in
effect before and after the date of the enactment
of the Energy Improvement and Extension Act
of 2008) for preceding taxable years beginning
after December 31, 1982.
‘‘(C) REDUCTION FOR POST-2008 FOREIGN OIL AND GAS
LOSSES.—The reduction under this paragraph shall be
equal to the lesser of—
‘‘(i) the combined foreign oil and gas income of
the taxpayer for the taxable year (determined without
regard to this paragraph), reduced by an amount equal
to the reduction under subparagraph (A) for the taxable
year, or
‘‘(ii) the excess of—
‘‘(I) the aggregate amount of foreign oil and
gas losses for preceding taxable years beginning
after December 31, 2008, over
‘‘(II) so much of such aggregate amount as
was recharacterized under this paragraph for preceding taxable years beginning after December 31,
2008.
‘‘(D) FOREIGN OIL AND GAS LOSS DEFINED.—
‘‘(i) IN GENERAL.—For purposes of this paragraph,
the term ‘foreign oil and gas loss’ means the amount
by which—
‘‘(I) the gross income for the taxable year from
sources without the United States and its possessions (whether or not the taxpayer chooses the
benefits of this subpart for such taxable year)
taken into account in determining the combined
foreign oil and gas income for such year, is
exceeded by
‘‘(II) the sum of the deductions properly apportioned or allocated thereto.
‘‘(ii) NET OPERATING LOSS DEDUCTION NOT TAKEN
INTO ACCOUNT.—For purposes of clause (i), the net
operating loss deduction allowable for the taxable year
under section 172(a) shall not be taken into account.
‘‘(iii) EXPROPRIATION AND CASUALTY LOSSES NOT
TAKEN INTO ACCOUNT.—For purposes of clause (i), there
shall not be taken into account—

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26 USC 907.

Effective date.

26 USC 907 note.

PUBLIC LAW 110–343—OCT. 3, 2008

‘‘(I) any foreign expropriation loss (as defined
in section 172(h) (as in effect on the day before
the date of the enactment of the Revenue Reconciliation Act of 1990)) for the taxable year, or
‘‘(II) any loss for the taxable year which arises
from fire, storm, shipwreck, or other casualty, or
from theft,
to the extent such loss is not compensated for by insurance or otherwise.
‘‘(iv) FOREIGN OIL EXTRACTION LOSS.—For purposes
of subparagraph (B)(ii)(I), foreign oil extraction losses
shall be determined under this paragraph as in effect
on the day before the date of the enactment of the
Energy Improvement and Extension Act of 2008.’’.
(c) CARRYBACK AND CARRYOVER OF DISALLOWED CREDITS.—
Section 907(f) (relating to carryback and carryover of disallowed
credits) is amended—
(1) by striking ‘‘oil and gas extraction taxes’’ each place
it appears and inserting ‘‘foreign oil and gas taxes’’, and
(2) by adding at the end the following new paragraph:
‘‘(4) TRANSITION RULES FOR PRE-2009 AND 2009 DISALLOWED
CREDITS.—
‘‘(A) PRE-2009 CREDITS.—In the case of any unused
credit year beginning before January 1, 2009, this subsection shall be applied to any unused oil and gas extraction
taxes carried from such unused credit year to a year beginning after December 31, 2008—
‘‘(i) by substituting ‘oil and gas extraction taxes’
for ‘foreign oil and gas taxes’ each place it appears
in paragraphs (1), (2), and (3), and
‘‘(ii) by computing, for purposes of paragraph
(2)(A), the limitation under subparagraph (A) for the
year to which such taxes are carried by substituting
‘foreign oil and gas extraction income’ for ‘foreign oil
and gas income’ in subsection (a).
‘‘(B) 2009 CREDITS.—In the case of any unused credit
year beginning in 2009, the amendments made to this
subsection by the Energy Improvement and Extension Act
of 2008 shall be treated as being in effect for any preceding
year beginning before January 1, 2009, solely for purposes
of determining how much of the unused foreign oil and
gas taxes for such unused credit year may be deemed
paid or accrued in such preceding year.’’.
(d) CONFORMING AMENDMENT.—Section 6501(i) is amended by
striking ‘‘oil and gas extraction taxes’’ and inserting ‘‘foreign oil
and gas taxes’’.
(e) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2008.

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SEC. 403. BROKER REPORTING OF CUSTOMER’S BASIS IN SECURITIES
TRANSACTIONS.

(a) IN GENERAL.—
(1) BROKER REPORTING FOR SECURITIES TRANSACTIONS.—
Section 6045 is amended by adding at the end the following
new subsection:
‘‘(g) ADDITIONAL INFORMATION REQUIRED IN THE CASE OF SECURITIES TRANSACTIONS, ETC.—

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3855

‘‘(1) IN GENERAL.—If a broker is otherwise required to
make a return under subsection (a) with respect to the gross
proceeds of the sale of a covered security, the broker shall
include in such return the information described in paragraph
(2).
‘‘(2) ADDITIONAL INFORMATION REQUIRED.—
‘‘(A) IN GENERAL.—The information required under
paragraph (1) to be shown on a return with respect to
a covered security of a customer shall include the customer’s adjusted basis in such security and whether any
gain or loss with respect to such security is long-term
or short-term (within the meaning of section 1222).
‘‘(B) DETERMINATION OF ADJUSTED BASIS.—For purposes of subparagraph (A)—
‘‘(i) IN GENERAL.—The customer’s adjusted basis
shall be determined—
‘‘(I) in the case of any security (other than
any stock for which an average basis method is
permissible under section 1012), in accordance
with the first-in first-out method unless the customer notifies the broker by means of making an
adequate identification of the stock sold or transferred, and
‘‘(II) in the case of any stock for which an
average basis method is permissible under section
1012, in accordance with the broker’s default
method unless the customer notifies the broker
that he elects another acceptable method under
section 1012 with respect to the account in which
such stock is held.
‘‘(ii) EXCEPTION FOR WASH SALES.—Except as otherwise provided by the Secretary, the customer’s adjusted
basis shall be determined without regard to section
1091 (relating to loss from wash sales of stock or
securities) unless the transactions occur in the same
account with respect to identical securities.
‘‘(3) COVERED SECURITY.—For purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘covered security’ means
any specified security acquired on or after the applicable
date if such security—
‘‘(i) was acquired through a transaction in the
account in which such security is held, or
‘‘(ii) was transferred to such account from an
account in which such security was a covered security,
but only if the broker received a statement under section 6045A with respect to the transfer.
‘‘(B) SPECIFIED SECURITY.—The term ‘specified security’
means—
‘‘(i) any share of stock in a corporation,
‘‘(ii) any note, bond, debenture, or other evidence
of indebtedness,
‘‘(iii) any commodity, or contract or derivative with
respect to such commodity, if the Secretary determines
that adjusted basis reporting is appropriate for purposes of this subsection, and

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122 STAT. 3856

‘‘(iv) any other financial instrument with respect
to which the Secretary determines that adjusted basis
reporting is appropriate for purposes of this subsection.
‘‘(C) APPLICABLE DATE.—The term ‘applicable date’
means—
‘‘(i) January 1, 2011, in the case of any specified
security which is stock in a corporation (other than
any stock described in clause (ii)),
‘‘(ii) January 1, 2012, in the case of any stock
for which an average basis method is permissible under
section 1012, and
‘‘(iii) January 1, 2013, or such later date determined by the Secretary in the case of any other specified security.
‘‘(4) TREATMENT OF S CORPORATIONS.—In the case of the
sale of a covered security acquired by an S corporation (other
than a financial institution) after December 31, 2011, such
S corporation shall be treated in the same manner as a partnership for purposes of this section.
‘‘(5) SPECIAL RULES FOR SHORT SALES.—In the case of a
short sale, reporting under this section shall be made for the
year in which such sale is closed.’’.
(2) BROKER INFORMATION REQUIRED WITH RESPECT TO
OPTIONS.—Section 6045, as amended by subsection (a), is
amended by adding at the end the following new subsection:
‘‘(h) APPLICATION TO OPTIONS ON SECURITIES.—
‘‘(1) EXERCISE OF OPTION.—For purposes of this section,
if a covered security is acquired or disposed of pursuant to
the exercise of an option that was granted or acquired in
the same account as the covered security, the amount received
with respect to the grant or paid with respect to the acquisition
of such option shall be treated as an adjustment to gross
proceeds or as an adjustment to basis, as the case may be.
‘‘(2) LAPSE OR CLOSING TRANSACTION.—In the case of the
lapse (or closing transaction (as defined in section
1234(b)(2)(A))) of an option on a specified security or the exercise of a cash-settled option on a specified security, reporting
under subsections (a) and (g) with respect to such option shall
be made for the calendar year which includes the date of
such lapse, closing transaction, or exercise.
‘‘(3) PROSPECTIVE APPLICATION.—Paragraphs (1) and (2)
shall not apply to any option which is granted or acquired
before January 1, 2013.
‘‘(4) DEFINITIONS.—For purposes of this subsection, the
terms ‘covered security’ and ‘specified security’ shall have the
meanings given such terms in subsection (g)(3).’’.
(3) EXTENSION OF PERIOD FOR STATEMENTS SENT TO CUSTOMERS.—
(A) IN GENERAL.—Subsection (b) of section 6045 is
amended by striking ‘‘January 31’’ and inserting ‘‘February
15’’.
(B) STATEMENTS RELATED TO SUBSTITUTE PAYMENTS.—
Subsection (d) of section 6045 is amended—
(i) by striking ‘‘at such time and’’, and
(ii) by inserting after ‘‘other item.’’ the following
new sentence: ‘‘The written statement required under
the preceding sentence shall be furnished on or before

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February 15 of the year following the calendar year
in which the payment was made.’’.
(C) OTHER STATEMENTS.—Subsection (b) of section 6045
is amended by adding at the end the following: ‘‘In the
case of a consolidated reporting statement (as defined in
regulations) with respect to any customer, any statement
which would otherwise be required to be furnished on
or before January 31 of a calendar year with respect to
any item reportable to the taxpayer shall instead be
required to be furnished on or before February 15 of such
calendar year if furnished with such consolidated reporting
statement.’’.
(b) DETERMINATION OF BASIS OF CERTAIN SECURITIES ON
ACCOUNT BY ACCOUNT OR AVERAGE BASIS METHOD.—Section 1012
is amended—
(1) by striking ‘‘The basis of property’’ and inserting the
following:
‘‘(a) IN GENERAL.—The basis of property’’,
(2) by striking ‘‘The cost of real property’’ and inserting
the following:
‘‘(b) SPECIAL RULE FOR APPORTIONED REAL ESTATE TAXES.—
The cost of real property’’, and
(3) by adding at the end the following new subsections:
‘‘(c) DETERMINATIONS BY ACCOUNT.—
‘‘(1) IN GENERAL.—In the case of the sale, exchange, or
other disposition of a specified security on or after the applicable
date, the conventions prescribed by regulations under this section shall be applied on an account by account basis.
‘‘(2) APPLICATION TO CERTAIN FUNDS.—
‘‘(A) IN GENERAL.—Except as provided in subparagraph
(B), any stock for which an average basis method is permissible under section 1012 which is acquired before January
1, 2012, shall be treated as a separate account from any
such stock acquired on or after such date.
‘‘(B) ELECTION FUND FOR TREATMENT AS SINGLE
ACCOUNT.—If a fund described in subparagraph (A) elects
to have this subparagraph apply with respect to one or
more of its stockholders—
‘‘(i) subparagraph (A) shall not apply with respect
to any stock in such fund held by such stockholders,
and
‘‘(ii) all stock in such fund which is held by such
stockholders shall be treated as covered securities
described in section 6045(g)(3) without regard to the
date of the acquisition of such stock.
A rule similar to the rule of the preceding sentence shall
apply with respect to a broker holding such stock as a
nominee.
‘‘(3) DEFINITIONS.—For purposes of this section, the terms
‘specified security’ and ‘applicable date’ shall have the meaning
given such terms in section 6045(g).
‘‘(d) AVERAGE BASIS FOR STOCK ACQUIRED PURSUANT TO A DIVIDEND REINVESTMENT PLAN.—
‘‘(1) IN GENERAL.—In the case of any stock acquired after
December 31, 2010, in connection with a dividend reinvestment
plan, the basis of such stock while held as part of such plan

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PUBLIC LAW 110–343—OCT. 3, 2008
shall be determined using one of the methods which may be
used for determining the basis of stock in an open-end fund.
‘‘(2) TREATMENT AFTER TRANSFER.—In the case of the
transfer to another account of stock to which paragraph (1)
applies, such stock shall have a cost basis in such other account
equal to its basis in the dividend reinvestment plan immediately before such transfer (properly adjusted for any fees
or other charges taken into account in connection with such
transfer).
‘‘(3) SEPARATE ACCOUNTS; ELECTION FOR TREATMENT AS
SINGLE ACCOUNT.—Rules similar to the rules of subsection (c)(2)
shall apply for purposes of this subsection.
‘‘(4) DIVIDEND REINVESTMENT PLAN.—For purposes of this
subsection—
‘‘(A) IN GENERAL.—The term ‘dividend reinvestment
plan’ means any arrangement under which dividends on
any stock are reinvested in stock identical to the stock
with respect to which the dividends are paid.
‘‘(B) INITIAL STOCK ACQUISITION TREATED AS ACQUIRED
IN CONNECTION WITH PLAN.—Stock shall be treated as
acquired in connection with a dividend reinvestment plan
if such stock is acquired pursuant to such plan or if the
dividends paid on such stock are subject to such plan.’’.
(c) INFORMATION BY TRANSFERORS TO AID BROKERS.—
(1) IN GENERAL.—Subpart B of part III of subchapter A
of chapter 61 is amended by inserting after section 6045 the
following new section:

Applicability.

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

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‘‘(a) FURNISHING OF INFORMATION.—Every applicable person
which transfers to a broker (as defined in section 6045(c)(1)) a
security which is a covered security (as defined in section 6045(g)(3))
in the hands of such applicable person shall furnish to such broker
a written statement in such manner and setting forth such information as the Secretary may by regulations prescribe for purposes
of enabling such broker to meet the requirements of section 6045(g).
‘‘(b) APPLICABLE PERSON.—For purposes of subsection (a), the
term ‘applicable person’ means—
‘‘(1) any broker (as defined in section 6045(c)(1)), and
‘‘(2) any other person as provided by the Secretary in
regulations.
‘‘(c) TIME FOR FURNISHING STATEMENT.—Except as otherwise
provided by the Secretary, any statement required by subsection
(a) shall be furnished not later than 15 days after the date of
the transfer described in such subsection.’’.
(2) ASSESSABLE PENALTIES.—Paragraph (2) of section
6724(d), as amended by the Housing Assistance Tax Act of
2008, is amended by redesignating subparagraphs (I) through
(DD) as subparagraphs (J) through (EE), respectively, and by
inserting after subparagraph (H) the following new subparagraph:
‘‘(I) section 6045A (relating to information required
in connection with transfers of covered securities to brokers),’’.
(3) CLERICAL AMENDMENT.—The table of sections for subpart B of part III of subchapter A of chapter 61 is amended

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by inserting after the item relating to section 6045 the following
new item:
‘‘Sec. 6045A. Information required in connection with transfers of covered securities
to brokers.’’.

(d) ADDITIONAL ISSUER INFORMATION TO AID BROKERS.—
(1) IN GENERAL.—Subpart B of part III of subchapter A
of chapter 61, as amended by subsection (b), is amended by
inserting after section 6045A the following new section:

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

‘‘(a) IN GENERAL.—According to the forms or regulations prescribed by the Secretary, any issuer of a specified security shall
make a return setting forth—
‘‘(1) a description of any organizational action which affects
the basis of such specified security of such issuer,
‘‘(2) the quantitative effect on the basis of such specified
security resulting from such action, and
‘‘(3) such other information as the Secretary may prescribe.
‘‘(b) TIME FOR FILING RETURN.—Any return required by subsection (a) shall be filed not later than the earlier of—
‘‘(1) 45 days after the date of the action described in subsection (a), or
‘‘(2) January 15 of the year following the calendar year
during which such action occurred.
‘‘(c) STATEMENTS TO BE FURNISHED TO HOLDERS OF SPECIFIED
SECURITIES OR THEIR NOMINEES.—According to the forms or regulations prescribed by the Secretary, every person required to make
a return under subsection (a) with respect to a specified security
shall furnish to the nominee with respect to the specified security
(or certificate holder if there is no nominee) a written statement
showing—
‘‘(1) the name, address, and phone number of the information contact of the person required to make such return,
‘‘(2) the information required to be shown on such return
with respect to such security, and
‘‘(3) such other information as the Secretary may prescribe.
The written statement required under the preceding sentence shall
be furnished to the holder on or before January 15 of the year
following the calendar year during which the action described in
subsection (a) occurred.
‘‘(d) SPECIFIED SECURITY.—For purposes of this section, the
term ‘specified security’ has the meaning given such term by section
6045(g)(3)(B). No return shall be required under this section with
respect to actions described in subsection (a) with respect to a
specified security which occur before the applicable date (as defined
in section 6045(g)(3)(C)) with respect to such security.
‘‘(e) PUBLIC REPORTING IN LIEU OF RETURN.—The Secretary
may waive the requirements under subsections (a) and (c) with
respect to a specified security, if the person required to make
the return under subsection (a) makes publicly available, in such
form and manner as the Secretary determines necessary to carry
out the purposes of this section—
‘‘(1) the name, address, phone number, and email address
of the information contact of such person, and
‘‘(2) the information described in paragraphs (1), (2), and
(3) of subsection (a).’’.

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Regulations.

Deadline.

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PUBLIC LAW 110–343—OCT. 3, 2008
(2) ASSESSABLE PENALTIES.—
(A) Subparagraph (B) of section 6724(d)(1), as amended
by the Housing Assistance Tax Act of 2008, is amended
by redesignating clause (iv) and each of the clauses which
follow as clauses (v) through (xxiii), respectively, and by
inserting after clause (iii) the following new clause:
‘‘(iv) section 6045B(a) (relating to returns relating
to actions affecting basis of specified securities),’’.
(B) Paragraph (2) of section 6724(d), as amended by
the Housing Assistance Tax Act of 2008 and by subsection
(c)(2), is amended by redesignating subparagraphs (J)
through (EE) as subparagraphs (K) through (FF), respectively, and by inserting after subparagraph (I) the following
new subparagraph:
‘‘(J) subsections (c) and (e) of section 6045B (relating
to returns relating to actions affecting basis of specified
securities),’’.
(3) CLERICAL AMENDMENT.—The table of sections for subpart B of part III of subchapter A of chapter 61, as amended
by subsection (b)(3), is amended by inserting after the item
relating to section 6045A the following new item:

26 USC 6724.

‘‘Sec. 6045B. Returns relating to actions affecting basis of specified securities.’’.

(e) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall take effect
on January 1, 2011.
(2) EXTENSION OF PERIOD FOR STATEMENTS SENT TO CUSTOMERS.—The amendments made by subsection (a)(3) shall
apply to statements required to be furnished after December
31, 2008.

26 USC 1012
note.

Applicability.

SEC. 404. 0.2 PERCENT FUTA SURTAX.
26 USC 3301.

26 USC 3301
note.

(a) IN GENERAL.—Section 3301 (relating to rate of tax) is
amended—
(1) by striking ‘‘through 2008’’ in paragraph (1) and
inserting ‘‘through 2009’’, and
(2) by striking ‘‘calendar year 2009’’ in paragraph (2) and
inserting ‘‘calendar year 2010’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to wages paid after December 31, 2008.
SEC. 405. INCREASE AND EXTENSION OF OIL SPILL LIABILITY TRUST
FUND TAX.

(a) INCREASE IN RATE.—
(1) IN GENERAL.—Section 4611(c)(2)(B) (relating to rates)
is amended by striking ‘‘is 5 cents a barrel.’’ and inserting
‘‘is—
‘‘(i) in the case of crude oil received or petroleum
products entered before January 1, 2017, 8 cents a
barrel, and
‘‘(ii) in the case of crude oil received or petroleum
products entered after December 31, 2016, 9 cents
a barrel.’’.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply on and after the first day of the first calendar
quarter beginning more than 60 days after the date of the
enactment of this Act.

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26 USC 4611
note.

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(b) EXTENSION.—
(1) IN GENERAL.—Section 4611(f) (relating to application
of Oil Spill Liability Trust Fund financing rate) is amended
by striking paragraphs (2) and (3) and inserting the following
new paragraph:
‘‘(2) TERMINATION.—The Oil Spill Liability Trust Fund
financing rate shall not apply after December 31, 2017.’’.
(2) CONFORMING AMENDMENT.—Section 4611(f)(1) is
amended by striking ‘‘paragraphs (2) and (3)’’ and inserting
‘‘paragraph (2)’’.
(3) EFFECTIVE DATE.—The amendments made by this subsection shall take effect on the date of the enactment of this
Act.

DIVISION C—TAX EXTENDERS AND
ALTERNATIVE MINIMUM TAX RELIEF
SEC. 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

(a) SHORT TITLE.—This division may be cited as the ‘‘Tax
Extenders and Alternative Minimum Tax Relief Act of 2008’’.
(b) AMENDMENT OF 1986 CODE.—Except as otherwise expressly
provided, whenever in this division 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 of this division
is as follows:

26 USC 4611.

26 USC 4611
note.

Tax Extenders
and Alternative
Minimum Tax
Relief Act
of 2008.

26 USC 1 note.

Sec. 1. Short title; amendment of 1986 Code; table of contents.
TITLE I—ALTERNATIVE MINIMUM TAX RELIEF
Sec. 101. Extension of alternative minimum tax relief for nonrefundable personal
credits.
Sec. 102. Extension of increased alternative minimum tax exemption amount.
Sec. 103. Increase of AMT refundable credit amount for individuals with long-term
unused credits for prior year minimum tax liability, etc.
TITLE II—EXTENSION OF INDIVIDUAL TAX PROVISIONS
Sec. 201. Deduction for State and local sales taxes.
Sec. 202. Deduction of qualified tuition and related expenses.
Sec. 203. Deduction for certain expenses of elementary and secondary school teachers.
Sec. 204. Additional standard deduction for real property taxes for nonitemizers.
Sec. 205. Tax-free distributions from individual retirement plans for charitable purposes.
Sec. 206. Treatment of certain dividends of regulated investment companies.
Sec. 207. Stock in RIC for purposes of determining estates of nonresidents not citizens.
Sec. 208. Qualified investment entities.
TITLE III—EXTENSION OF BUSINESS TAX PROVISIONS
Extension and modification of research credit.
New markets tax credit.
Subpart F exception for active financing income.
Extension of look-thru rule for related controlled foreign corporations.
Extension of 15-year straight-line cost recovery for qualified leasehold improvements and qualified restaurant improvements; 15-year straightline cost recovery for certain improvements to retail space.
Sec. 306. Modification of tax treatment of certain payments to controlling exempt
organizations.

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Sec.
Sec.
Sec.
Sec.
Sec.

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301.
302.
303.
304.
305.

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Sec. 307. Basis adjustment to stock of S corporations making charitable contributions of property.
Sec. 308. Increase in limit on cover over of rum excise tax to Puerto Rico and the
Virgin Islands.
Sec. 309. Extension of economic development credit for American Samoa.
Sec. 310. Extension of mine rescue team training credit.
Sec. 311. Extension of election to expense advanced mine safety equipment.
Sec. 312. Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico.
Sec. 313. Qualified zone academy bonds.
Sec. 314. Indian employment credit.
Sec. 315. Accelerated depreciation for business property on Indian reservations.
Sec. 316. Railroad track maintenance.
Sec. 317. Seven-year cost recovery period for motorsports racing track facility.
Sec. 318. Expensing of environmental remediation costs.
Sec. 319. Extension of work opportunity tax credit for Hurricane Katrina employees.
Sec. 320. Extension of increased rehabilitation credit for structures in the Gulf Opportunity Zone.
Sec. 321. Enhanced deduction for qualified computer contributions.
Sec. 322. Tax incentives for investment in the District of Columbia.
Sec. 323. Enhanced charitable deductions for contributions of food inventory.
Sec. 324. Extension of enhanced charitable deduction for contributions of book inventory.
Sec. 325. Extension and modification of duty suspension on wool products; wool research fund; wool duty refunds.
TITLE IV—EXTENSION OF TAX ADMINISTRATION PROVISIONS
Sec. 401. Permanent authority for undercover operations.
Sec. 402. Permanent authority for disclosure of information relating to terrorist activities.
TITLE V—ADDITIONAL TAX RELIEF AND OTHER TAX PROVISIONS
Subtitle A—General Provisions
Sec. 501. $8,500 income threshold used to calculate refundable portion of child tax
credit.
Sec. 502. Provisions related to film and television productions.
Sec. 503. Exemption from excise tax for certain wooden arrows designed for use by
children.
Sec. 504. Income averaging for amounts received in connection with the Exxon
Valdez litigation.
Sec. 505. Certain farming business machinery and equipment treated as 5-year
property.
Sec. 506. Modification of penalty on understatement of taxpayer’s liability by tax
return preparer.
Subtitle B—Paul Wellstone and Pete Domenici Mental Health Parity and Addiction
Equity Act of 2008
Sec. 511. Short title.
Sec. 512. Mental health parity.
TITLE VI—OTHER PROVISIONS
Sec. 601. Secure rural schools and community self-determination program.
Sec. 602. Transfer to abandoned mine reclamation fund.
TITLE VII—DISASTER RELIEF
Sec. 701.
Sec. 702.

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Sec. 703.
Sec. 704.

Subtitle A—Heartland and Hurricane Ike Disaster Relief
Short title.
Temporary tax relief for areas damaged by 2008 Midwestern severe
storms, tornados, and flooding.
Reporting requirements relating to disaster relief contributions.
Temporary tax-exempt bond financing and low-income housing tax relief
for areas damaged by Hurricane Ike.

Subtitle B—National Disaster Relief
Sec. 706. Losses attributable to federally declared disasters.
Sec. 707. Expensing of Qualified Disaster Expenses.
Sec. 708. Net operating losses attributable to federally declared disasters.

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Sec. 709. Waiver of certain mortgage revenue bond requirements following federally declared disasters.
Sec. 710. Special depreciation allowance for qualified disaster property.
Sec. 711. Increased expensing for qualified disaster assistance property.
Sec. 712. Coordination with Heartland disaster relief.
TITLE VIII—SPENDING REDUCTIONS AND APPROPRIATE REVENUE
RAISERS FOR NEW TAX RELIEF POLICY
Sec. 801. Nonqualified deferred compensation from certain tax indifferent parties.

TITLE I—ALTERNATIVE MINIMUM TAX
RELIEF
SEC. 101. EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF FOR
NONREFUNDABLE PERSONAL CREDITS.

(a) IN GENERAL.—Paragraph (2) of section 26(a) (relating to
special rule for taxable years 2000 through 2007) is amended—
(1) by striking ‘‘or 2007’’ and inserting ‘‘2007, or 2008’’,
and
(2) by striking ‘‘2007’’ in the heading thereof and inserting
‘‘2008’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2007.

26 USC 26.

26 USC 26 note.

SEC. 102. EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX
EXEMPTION AMOUNT.

(a) IN GENERAL.—Paragraph (1) of section 55(d) (relating to
exemption amount) is amended—
(1) by striking ‘‘($66,250 in the case of taxable years beginning in 2007)’’ in subparagraph (A) and inserting ‘‘($69,950
in the case of taxable years beginning in 2008)’’, and
(2) by striking ‘‘($44,350 in the case of taxable years beginning in 2007)’’ in subparagraph (B) and inserting ‘‘($46,200
in the case of taxable years beginning in 2008)’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2007.

26 USC 55 note.

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SEC. 103. INCREASE OF AMT REFUNDABLE CREDIT AMOUNT FOR
INDIVIDUALS WITH LONG-TERM UNUSED CREDITS FOR
PRIOR YEAR MINIMUM TAX LIABILITY, ETC.

(a) IN GENERAL.—Paragraph (2) of section 53(e) is amended
to read as follows:
‘‘(2) AMT REFUNDABLE CREDIT AMOUNT.—For purposes of
paragraph (1), the term ‘AMT refundable credit amount’ means,
with respect to any taxable year, the amount (not in excess
of the long-term unused minimum tax credit for such taxable
year) equal to the greater of—
‘‘(A) 50 percent of the long-term unused minimum tax
credit for such taxable year, or
‘‘(B) the amount (if any) of the AMT refundable credit
amount determined under this paragraph for the taxpayer’s
preceding taxable year (determined without regard to subsection (f)(2)).’’.
(b) TREATMENT OF CERTAIN UNDERPAYMENTS, INTEREST, AND
PENALTIES ATTRIBUTABLE TO THE TREATMENT OF INCENTIVE STOCK
OPTIONS.—Section 53 is amended by adding at the end the following
new subsection:

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PUBLIC LAW 110–343—OCT. 3, 2008

‘‘(f) TREATMENT OF CERTAIN UNDERPAYMENTS, INTEREST, AND
PENALTIES ATTRIBUTABLE TO THE TREATMENT OF INCENTIVE STOCK
OPTIONS.—
‘‘(1) ABATEMENT.—Any underpayment of tax outstanding
on the date of the enactment of this subsection which is attributable to the application of section 56(b)(3) for any taxable
year ending before January 1, 2008, and any interest or penalty
with respect to such underpayment which is outstanding on
such date of enactment, is hereby abated. The amount determined under subsection (b)(1) shall not include any tax abated
under the preceding sentence.
‘‘(2) INCREASE IN CREDIT FOR CERTAIN INTEREST AND PENALTIES ALREADY PAID.—The AMT refundable credit amount,
and the minimum tax credit determined under subsection (b),
for the taxpayer’s first 2 taxable years beginning after
December 31, 2007, shall each be increased by 50 percent
of the aggregate amount of the interest and penalties which
were paid by the taxpayer before the date of the enactment
of this subsection and which would (but for such payment)
have been abated under paragraph (1).’’.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2007.
(2) ABATEMENT.—Section 53(f)(1), as added by subsection
(b), shall take effect on the date of the enactment of this
Act.

TITLE II—EXTENSION OF INDIVIDUAL
TAX PROVISIONS
SEC. 201. DEDUCTION FOR STATE AND LOCAL SALES TAXES.
26 USC 164.

26 USC 164 note.

(a) IN GENERAL.—Subparagraph (I) of section 164(b)(5) is
amended by striking ‘‘January 1, 2008’’ and inserting ‘‘January
1, 2010’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to taxable years beginning after December 31, 2007.
SEC.

26 USC 222 note.

202.

DEDUCTION
EXPENSES.

OF

QUALIFIED

TUITION

AND

RELATED

(a) IN GENERAL.—Subsection (e) of section 222 (relating to
termination) is amended by striking ‘‘December 31, 2007’’ and
inserting ‘‘December 31, 2009’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to taxable years beginning after December 31, 2007.

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SEC. 203. DEDUCTION FOR CERTAIN EXPENSES OF ELEMENTARY AND
SECONDARY SCHOOL TEACHERS.

26 USC 62 note.

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(a) IN GENERAL.—Subparagraph (D) of section 62(a)(2) (relating
to certain expenses of elementary and secondary school teachers)
is amended by striking ‘‘or 2007’’ and inserting ‘‘2007, 2008, or
2009’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to taxable years beginning after December 31, 2007.

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SEC. 204. ADDITIONAL STANDARD DEDUCTION FOR REAL PROPERTY
TAXES FOR NONITEMIZERS.

(a) IN GENERAL.—Subparagraph (C) of section 63(c)(1), as added
by the Housing Assistance Tax Act of 2008, is amended by inserting
‘‘or 2009’’ after ‘‘2008’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to taxable years beginning after December 31, 2008.

26 USC 63.
26 USC 63 note.

SEC. 205. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT
PLANS FOR CHARITABLE PURPOSES.

(a) IN GENERAL.—Subparagraph (F) of section 408(d)(8)
(relating to termination) is amended by striking ‘‘December 31,
2007’’ and inserting ‘‘December 31, 2009’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to distributions made in taxable years beginning after
December 31, 2007.

26 USC 408 note.

SEC. 206. TREATMENT OF CERTAIN DIVIDENDS OF REGULATED
INVESTMENT COMPANIES.

(a) INTEREST-RELATED DIVIDENDS.—Subparagraph (C) of section
871(k)(1) (defining interest-related dividend) is amended by striking
‘‘December 31, 2007’’ and inserting ‘‘December 31, 2009’’.
(b) SHORT-TERM CAPITAL GAIN DIVIDENDS.—Subparagraph (C)
of section 871(k)(2) (defining short-term capital gain dividend) is
amended by striking ‘‘December 31, 2007’’ and inserting ‘‘December
31, 2009’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to dividends with respect to taxable years of regulated
investment companies beginning after December 31, 2007.

26 USC 871 note.

SEC. 207. STOCK IN RIC FOR PURPOSES OF DETERMINING ESTATES
OF NONRESIDENTS NOT CITIZENS.

(a) IN GENERAL.—Paragraph (3) of section 2105(d) (relating
to stock in a RIC) is amended by striking ‘‘December 31, 2007’’
and inserting ‘‘December 31, 2009’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to decedents dying after December 31, 2007.

26 USC 2105
note.

SEC. 208. QUALIFIED INVESTMENT ENTITIES.

(a) IN GENERAL.—Clause (ii) of section 897(h)(4)(A) (relating
to termination) is amended by striking ‘‘December 31, 2007’’ and
inserting ‘‘December 31, 2009’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on January 1, 2008.

26 USC 897 note.

TITLE III—EXTENSION OF BUSINESS
TAX PROVISIONS

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SEC. 301. EXTENSION AND MODIFICATION OF RESEARCH CREDIT.

(a) EXTENSION.—
(1) IN GENERAL.—Section 41(h) (relating to termination)
is amended by striking ‘‘December 31, 2007’’ and inserting
‘‘December 31, 2009’’ in paragraph (1)(B).
(2) CONFORMING AMENDMENT.—Subparagraph (D) of section 45C(b)(1) (relating to special rule) is amended by striking

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26 USC 41.

Applicability.

26 USC 41 note.

PUBLIC LAW 110–343—OCT. 3, 2008

‘‘after December 31, 2007’’ and inserting ‘‘after December 31,
2009’’.
(b) TERMINATION OF ALTERNATIVE INCREMENTAL CREDIT.—Section 41(h) is amended by redesignating paragraph (2) as paragraph
(3), and by inserting after paragraph (1) the following new paragraph:
‘‘(2) TERMINATION OF ALTERNATIVE INCREMENTAL CREDIT.—
No election under subsection (c)(4) shall apply to taxable years
beginning after December 31, 2008.’’.
(c) MODIFICATION OF ALTERNATIVE SIMPLIFIED CREDIT.—Paragraph (5)(A) of section 41(c) (relating to election of alternative
simplified credit) is amended by striking ‘‘12 percent’’ and inserting
‘‘14 percent (12 percent in the case of taxable years ending before
January 1, 2009)’’.
(d) TECHNICAL CORRECTION.—Paragraph (3) of section 41(h)
is amended to read as follows:
‘‘(2) COMPUTATION FOR TAXABLE YEAR IN WHICH CREDIT
TERMINATES.—In the case of any taxable year with respect
to which this section applies to a number of days which is
less than the total number of days in such taxable year—
‘‘(A) the amount determined under subsection (c)(1)(B)
with respect to such taxable year shall be the amount
which bears the same ratio to such amount (determined
without regard to this paragraph) as the number of days
in such taxable year to which this section applies bears
to the total number of days in such taxable year, and
‘‘(B) for purposes of subsection (c)(5), the average qualified research expenses for the preceding 3 taxable years
shall be the amount which bears the same ratio to such
average qualified research expenses (determined without
regard to this paragraph) as the number of days in such
taxable year to which this section applies bears to the
total number of days in such taxable year.’’.
(e) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2007.
(2) EXTENSION.—The amendments made by subsection (a)
shall apply to amounts paid or incurred after December 31,
2007.
SEC. 302. NEW MARKETS TAX CREDIT.

Subparagraph (D) of section 45D(f)(1) (relating to national
limitation on amount of investments designated) is amended by
striking ‘‘and 2008’’ and inserting ‘‘2008, and 2009’’.

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SEC. 303. SUBPART F EXCEPTION FOR ACTIVE FINANCING INCOME.

(a) EXEMPT INSURANCE INCOME.—Paragraph (10) of section
953(e) (relating to application) is amended—
(1) by striking ‘‘January 1, 2009’’ and inserting ‘‘January
1, 2010’’, and
(2) by striking ‘‘December 31, 2008’’ and inserting
‘‘December 31, 2009’’.
(b) EXCEPTION TO TREATMENT AS FOREIGN PERSONAL HOLDING
COMPANY INCOME.—Paragraph (9) of section 954(h) (relating to
application) is amended by striking ‘‘January 1, 2009’’ and inserting
‘‘January 1, 2010’’.

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122 STAT. 3867

SEC. 304. EXTENSION OF LOOK-THRU RULE FOR RELATED CONTROLLED FOREIGN CORPORATIONS.

(a) IN GENERAL.—Subparagraph (C) of section 954(c)(6)
(relating to application) is amended by striking ‘‘January 1, 2009’’
and inserting ‘‘January 1, 2010’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to taxable years of foreign corporations beginning after
December 31, 2007, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end.

26 USC 954.

26 USC 954 note.

SEC. 305. EXTENSION OF 15-YEAR STRAIGHT-LINE COST RECOVERY
FOR QUALIFIED LEASEHOLD IMPROVEMENTS AND QUALIFIED RESTAURANT IMPROVEMENTS; 15-YEAR STRAIGHTLINE COST RECOVERY FOR CERTAIN IMPROVEMENTS TO
RETAIL SPACE.

(a) EXTENSION

OF

LEASEHOLD

AND

RESTAURANT IMPROVE-

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MENTS.—

(1) IN GENERAL.—Clauses (iv) and (v) of section 168(e)(3)(E)
(relating to 15-year property) are each amended by striking
‘‘January 1, 2008’’ and inserting ‘‘January 1, 2010’’.
(2) EFFECTIVE DATE.—The amendments made by this subsection shall apply to property placed in service after December
31, 2007.
(b) TREATMENT TO INCLUDE NEW CONSTRUCTION.—
(1) IN GENERAL.—Paragraph (7) of section 168(e) (relating
to classification of property) is amended to read as follows:
‘‘(7) QUALIFIED RESTAURANT PROPERTY.—
‘‘(A) IN GENERAL.—The term ‘qualified restaurant property’ means any section 1250 property which is—
‘‘(i) a building, if such building is placed in service
after December 31, 2008, and before January 1, 2010,
or
‘‘(ii) an improvement to a building,
if more than 50 percent of the building’s square footage
is devoted to preparation of, and seating for on-premises
consumption of, prepared meals.
‘‘(B) EXCLUSION FROM BONUS DEPRECIATION.—Property
described in this paragraph shall not be considered qualified property for purposes of subsection (k).’’.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to property placed in service after December
31, 2008.
(c) RECOVERY PERIOD FOR DEPRECIATION OF CERTAIN IMPROVEMENTS TO RETAIL SPACE.—
(1) 15-YEAR RECOVERY PERIOD.—Section 168(e)(3)(E)
(relating to 15-year property) is amended by striking ‘‘and’’
at the end of clause (vii), by striking the period at the end
of clause (viii) and inserting ‘‘, and’’, and by adding at the
end the following new clause:
‘‘(ix) any qualified retail improvement property
placed in service after December 31, 2008, and before
January 1, 2010.’’.
(2) QUALIFIED RETAIL IMPROVEMENT PROPERTY.—Section
168(e) is amended by adding at the end the following new
paragraph:
‘‘(8) QUALIFIED RETAIL IMPROVEMENT PROPERTY.—

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26 USC 168 note.

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PUBLIC LAW 110–343—OCT. 3, 2008
‘‘(A) IN GENERAL.—The term ‘qualified retail improvement property’ means any improvement to an interior portion of a building which is nonresidential real property
if—
‘‘(i) such portion is open to the general public and
is used in the retail trade or business of selling tangible
personal property to the general public, and
‘‘(ii) such improvement is placed in service more
than 3 years after the date the building was first
placed in service.
‘‘(B) IMPROVEMENTS MADE BY OWNER.—In the case of
an improvement made by the owner of such improvement,
such improvement shall be qualified retail improvement
property (if at all) only so long as such improvement is
held by such owner. Rules similar to the rules under paragraph (6)(B) shall apply for purposes of the preceding sentence.
‘‘(C) CERTAIN IMPROVEMENTS NOT INCLUDED.—Such
term shall not include any improvement for which the
expenditure is attributable to—
‘‘(i) the enlargement of the building,
‘‘(ii) any elevator or escalator,
‘‘(iii) any structural component benefitting a
common area, or
‘‘(iv) the internal structural framework of the
building.
‘‘(D) EXCLUSION FROM BONUS DEPRECIATION.—Property
described in this paragraph shall not be considered qualified property for purposes of subsection (k).
‘‘(E) TERMINATION.—Such term shall not include any
improvement placed in service after December 31, 2009.’’.
(3) REQUIREMENT TO USE STRAIGHT LINE METHOD.—Section
168(b)(3) is amended by adding at the end the following new
subparagraph:
‘‘(I) Qualified retail improvement property described
in subsection (e)(8).’’.
(4) ALTERNATIVE SYSTEM.—The table contained in section
168(g)(3)(B) is amended by inserting after the item relating
to subparagraph (E)(viii) the following new item:

26 USC 168.

‘‘(E)(ix) .............................................................................

39’’.

(5) EFFECTIVE DATE.—The amendments made by this subsection shall apply to property placed in service after December
31, 2008.

26 USC 168 note.

SEC. 306. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS
TO CONTROLLING EXEMPT ORGANIZATIONS.

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26 USC 512 note.

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(a) IN GENERAL.—Clause (iv) of section 512(b)(13)(E) (relating
to termination) is amended by striking ‘‘December 31, 2007’’ and
inserting ‘‘December 31, 2009’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to payments received or accrued after December 31,
2007.

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122 STAT. 3869

SEC. 307. BASIS ADJUSTMENT TO STOCK OF S CORPORATIONS MAKING
CHARITABLE CONTRIBUTIONS OF PROPERTY.

(a) IN GENERAL.—The last sentence of section 1367(a)(2)
(relating to decreases in basis) is amended by striking ‘‘December
31, 2007’’ and inserting ‘‘December 31, 2009’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to contributions made in taxable years beginning after
December 31, 2007.

26 USC 1367.

SEC. 308. INCREASE IN LIMIT ON COVER OVER OF RUM EXCISE TAX
TO PUERTO RICO AND THE VIRGIN ISLANDS.

(a) IN GENERAL.—Paragraph (1) of section 7652(f) is amended
by striking ‘‘January 1, 2008’’ and inserting ‘‘January 1, 2010’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to distilled spirits brought into the United States after
December 31, 2007.

26 USC 7652
note.

SEC. 309. EXTENSION OF ECONOMIC DEVELOPMENT CREDIT FOR
AMERICAN SAMOA.

(a) IN GENERAL.—Subsection (d) of section 119 of division A
of the Tax Relief and Health Care Act of 2006 is amended—
(1) by striking ‘‘first two taxable years’’ and inserting ‘‘first
4 taxable years’’, and
(2) by striking ‘‘January 1, 2008’’ and inserting ‘‘January
1, 2010’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2007.

26 USC 30A note.

26 USC 30A note.

SEC. 310. EXTENSION OF MINE RESCUE TEAM TRAINING CREDIT.

Section 45N(e) (relating to termination) is amended by striking
‘‘December 31, 2008’’ and inserting ‘‘December 31, 2009’’.
SEC. 311. EXTENSION OF ELECTION TO EXPENSE ADVANCED MINE
SAFETY EQUIPMENT.

Section 179E(g) (relating to termination) is amended by striking
‘‘December 31, 2008’’ and inserting ‘‘December 31, 2009’’.
SEC. 312. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES IN
PUERTO RICO.

(a) IN GENERAL.—Subparagraph (C) of section 199(d)(8)
(relating to termination) is amended—
(1) by striking ‘‘first 2 taxable years’’ and inserting ‘‘first
4 taxable years’’, and
(2) by striking ‘‘January 1, 2008’’ and inserting ‘‘January
1, 2010’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2007.

26 USC 199 note.

SEC. 313. QUALIFIED ZONE ACADEMY 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:

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‘‘SEC. 54E. QUALIFIED ZONE ACADEMY BONDS.

‘‘(a) QUALIFIED ZONE ACADEMY BONDS.—For purposes of this
subchapter, the term ‘qualified zone academy bond’ means any
bond issued as part of an issue if—

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‘‘(1) 100 percent of the available project proceeds of such
issue are to be used for a qualified purpose with respect to
a qualified zone academy established by an eligible local education agency,
‘‘(2) the bond is issued by a State or local government
within the jurisdiction of which such academy is located, and
‘‘(3) the issuer—
‘‘(A) designates such bond for purposes of this section,
‘‘(B) certifies that it has written assurances that the
private business contribution requirement of subsection (b)
will be met with respect to such academy, and
‘‘(C) certifies that it has the written approval of the
eligible local education agency for such bond issuance.
‘‘(b) PRIVATE BUSINESS CONTRIBUTION REQUIREMENT.—For purposes of subsection (a), the private business contribution requirement of this subsection is met with respect to any issue if the
eligible local education agency that established the qualified zone
academy has written commitments from private entities to make
qualified contributions having a present value (as of the date of
issuance of the issue) of not less than 10 percent of the proceeds
of the issue.
‘‘(c) LIMITATION ON AMOUNT OF BONDS DESIGNATED.—
‘‘(1) NATIONAL LIMITATION.—There is a national zone
academy bond limitation for each calendar year. Such limitation
is $400,000,000 for 2008 and 2009, and, except as provided
in paragraph (4), zero thereafter.
‘‘(2) ALLOCATION OF LIMITATION.—The national zone
academy bond limitation for a calendar year shall be allocated
by the Secretary among the States on the basis of their respective populations of individuals below the poverty line (as defined
by the Office of Management and Budget). The limitation
amount allocated to a State under the preceding sentence shall
be allocated by the State education agency to qualified zone
academies within such State.
‘‘(3) DESIGNATION SUBJECT TO LIMITATION AMOUNT.—The
maximum aggregate face amount of bonds issued during any
calendar year which may be designated under subsection (a)
with respect to any qualified zone academy shall not exceed
the limitation amount allocated to such academy under paragraph (2) for such calendar year.
‘‘(4) CARRYOVER OF UNUSED LIMITATION.—
‘‘(A) IN GENERAL.—If for any calendar year—
‘‘(i) the limitation amount for any State, exceeds
‘‘(ii) the amount of bonds issued during such year
which are designated under subsection (a) with respect
to qualified zone academies within such State,
the limitation amount for such State for the following calendar year shall be increased by the amount of such excess.
‘‘(B) LIMITATION ON CARRYOVER.—Any carryforward of
a limitation amount may be carried only to the first 2
years following the unused limitation year. For purposes
of the preceding sentence, a limitation amount shall be
treated as used on a first-in first-out basis.
‘‘(C) COORDINATION WITH SECTION 1397E.—Any carryover determined under section 1397E(e)(4) (relating to
carryover of unused limitation) with respect to any State
to calendar year 2008 or 2009 shall be treated for purposes

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3871

of this section as a carryover with respect to such State
for such calendar year under subparagraph (A), and the
limitation of subparagraph (B) shall apply to such carryover
taking into account the calendar years to which such carryover relates.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED ZONE ACADEMY.—The term ‘qualified zone
academy’ means any public school (or academic program within
a public school) which is established by and operated under
the supervision of an eligible local education agency to provide
education or training below the postsecondary level if—
‘‘(A) such public school or program (as the case may
be) is designed in cooperation with business to enhance
the academic curriculum, increase graduation and employment rates, and better prepare students for the rigors
of college and the increasingly complex workforce,
‘‘(B) students in such public school or program (as
the case may be) will be subject to the same academic
standards and assessments as other students educated by
the eligible local education agency,
‘‘(C) the comprehensive education plan of such public
school or program is approved by the eligible local education
agency, and
‘‘(D)(i) such public school is located in an empowerment
zone or enterprise community (including any such zone
or community designated after the date of the enactment
of this section), or
‘‘(ii) there is a reasonable expectation (as of the date
of issuance of the bonds) that at least 35 percent of the
students attending such school or participating in such
program (as the case may be) will be eligible for free
or reduced-cost lunches under the school lunch program
established under the National School Lunch Act.
‘‘(2) ELIGIBLE LOCAL EDUCATION AGENCY.—For purposes of
this section, the term ‘eligible local education agency’ means
any local educational agency as defined in section 9101 of
the Elementary and Secondary Education Act of 1965.
‘‘(3) QUALIFIED PURPOSE.—The term ‘qualified purpose’
means, with respect to any qualified zone academy—
‘‘(A) rehabilitating or repairing the public school facility
in which the academy is established,
‘‘(B) providing equipment for use at such academy,
‘‘(C) developing course materials for education to be
provided at such academy, and
‘‘(D) training teachers and other school personnel in
such academy.
‘‘(4) QUALIFIED CONTRIBUTIONS.—The term ‘qualified contribution’ means any contribution (of a type and quality acceptable to the eligible local education agency) of—
‘‘(A) equipment for use in the qualified zone academy
(including state-of-the-art technology and vocational equipment),
‘‘(B) technical assistance in developing curriculum or
in training teachers in order to promote appropriate market
driven technology in the classroom,
‘‘(C) services of employees as volunteer mentors,

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PUBLIC LAW 110–343—OCT. 3, 2008

‘‘(D) internships, field trips, or other educational
opportunities outside the academy for students, or
‘‘(E) any other property or service specified by the
eligible local education agency.’’.
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (1) of section 54A(d), as amended by this
Act, is amended by striking ‘‘or’’ at the end of subparagraph
(B), by inserting ‘‘or’’ at the end of subparagraph (C), and
by inserting after subparagraph (C) the following new subparagraph:
‘‘(D) a qualified zone academy bond,’’.
(2) Subparagraph (C) of section 54A(d)(2), as amended by
this Act, is amended by striking ‘‘and’’ at the end of clause
(ii), by striking the period at the end of clause (iii) and inserting
‘‘, and’’, and by adding at the end the following new clause:
‘‘(iv) in the case of a qualified zone academy bond,
a purpose specified in section 54E(a)(1).’’.
(3) Section 1397E is amended by adding at the end the
following new subsection:
‘‘(m) TERMINATION.—This section shall not apply to any obligation issued after the date of the enactment of the Tax Extenders
and Alternative Minimum Tax Relief Act of 2008.’’.
(4) The table of sections for subpart I of part IV of subchapter A of chapter 1 is amended by adding at the end the
following new item:

26 USC 54A.

‘‘Sec. 54E. Qualified zone academy bonds.’’.
26 USC 54A note.

(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to obligations issued after the date of the enactment
of this Act.
SEC. 314. INDIAN EMPLOYMENT CREDIT.

26 USC 45A note.

(a) IN GENERAL.—Subsection (f) of section 45A (relating to
termination) is amended by striking ‘‘December 31, 2007’’ and
inserting ‘‘December 31, 2009’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to taxable years beginning after December 31, 2007.
SEC. 315. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY
ON INDIAN RESERVATIONS.

26 USC 168 note.

(a) IN GENERAL.—Paragraph (8) of section 168(j) (relating to
termination) is amended by striking ‘‘December 31, 2007’’ and
inserting ‘‘December 31, 2009’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to property placed in service after December 31, 2007.

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SEC. 316. RAILROAD TRACK MAINTENANCE.

(a) IN GENERAL.—Subsection (f) of section 45G (relating to
application of section) is amended by striking ‘‘January 1, 2008’’
and inserting ‘‘January 1, 2010’’.
(b) CREDIT ALLOWED AGAINST ALTERNATIVE MINIMUM TAX.—
Subparagraph (B) of section 38(c)(4), as amended by this Act, is
amended—
(1) by redesignating clauses (v), (vi), and (vii) as clauses
(vi), (vii), and (viii), respectively, and
(2) by inserting after clause (iv) the following new clause:
‘‘(v) the credit determined under section 45G,’’.
(c) EFFECTIVE DATES.—

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(1) The amendment made by subsection (a) shall apply
to expenditures paid or incurred during taxable years beginning
after December 31, 2007.
(2) The amendments made by subsection (b) shall apply
to credits determined under section 45G of the Internal Revenue
Code of 1986 in taxable years beginning after December 31,
2007, and to carrybacks of such credits.

26 USC 45G
note.
26 USC 38 note.

SEC. 317. SEVEN-YEAR COST RECOVERY PERIOD FOR MOTORSPORTS
RACING TRACK FACILITY.

(a) IN GENERAL.—Subparagraph (D) of section 168(i)(15)
(relating to termination) is amended by striking ‘‘December 31,
2007’’ and inserting ‘‘December 31, 2009’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to property placed in service after December 31, 2007.

26 USC 168.

26 USC 168 note.

SEC. 318. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

(a) IN GENERAL.—Subsection (h) of section 198 (relating to
termination) is amended by striking ‘‘December 31, 2007’’ and
inserting ‘‘December 31, 2009’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to expenditures paid or incurred after December 31,
2007.

26 USC 198 note.

SEC. 319. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR
HURRICANE KATRINA EMPLOYEES.

(a) IN GENERAL.—Paragraph (1) of section 201(b) of the Katrina
Emergency Tax Relief Act of 2005 is amended by striking ‘‘2year’’ and inserting ‘‘4-year’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to individuals hired after August 27, 2007.

119 Stat. 2020.

SEC. 320. EXTENSION OF INCREASED REHABILITATION CREDIT FOR
STRUCTURES IN THE GULF OPPORTUNITY ZONE.

(a) IN GENERAL.—Subsection (h) of section 1400N is amended
by striking ‘‘December 31, 2008’’ and inserting ‘‘December 31, 2009’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to expenditures paid or incurred after the date of the
enactment of this Act.

26 USC 1400N
note.

SEC. 321. ENHANCED DEDUCTION FOR QUALIFIED COMPUTER CONTRIBUTIONS.

(a) IN GENERAL.—Subparagraph (G) of section 170(e)(6) is
amended by striking ‘‘December 31, 2007’’ and inserting ‘‘December
31, 2009’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to contributions made during taxable years beginning
after December 31, 2007.

26 USC 170 note.

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SEC. 322. TAX INCENTIVES FOR INVESTMENT IN THE DISTRICT OF
COLUMBIA.

(a) DESIGNATION OF ZONE.—
(1) IN GENERAL.—Subsection (f) of section 1400 is amended
by striking ‘‘2007’’ both places it appears and inserting ‘‘2009’’.
(2) EFFECTIVE DATE.—The amendments made by this subsection shall apply to periods beginning after December 31,
2007.
(b) TAX-EXEMPT ECONOMIC DEVELOPMENT BONDS.—

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note.

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(1) IN GENERAL.—Subsection (b) of section 1400A is
amended by striking ‘‘2007’’ and inserting ‘‘2009’’.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to bonds issued after December 31, 2007.
(c) ZERO PERCENT CAPITAL GAINS RATE.—
(1) IN GENERAL.—Subsection (b) of section 1400B is
amended by striking ‘‘2008’’ each place it appears and inserting
‘‘2010’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 1400B(e)(2) is amended—
(i) by striking ‘‘2012’’ and inserting ‘‘2014’’, and
(ii) by striking ‘‘2012’’ in the heading thereof and
inserting ‘‘2014’’.
(B) Section 1400B(g)(2) is amended by striking ‘‘2012’’
and inserting ‘‘2014’’.
(C) Section 1400F(d) is amended by striking ‘‘2012’’
and inserting ‘‘2014’’.
(3) EFFECTIVE DATES.—
(A) EXTENSION.—The amendments made by paragraph
(1) shall apply to acquisitions after December 31, 2007.
(B) CONFORMING AMENDMENTS.—The amendments
made by paragraph (2) shall take effect on the date of
the enactment of this Act.
(d) FIRST-TIME HOMEBUYER CREDIT.—
(1) IN GENERAL.—Subsection (i) of section 1400C is
amended by striking ‘‘2008’’ and inserting ‘‘2010’’.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to property purchased after December 31,
2007.

26 USC 1400A.

26 USC 1400B
note.

26 USC 1400C
note.

SEC. 323. ENHANCED CHARITABLE DEDUCTIONS FOR CONTRIBUTIONS
OF FOOD INVENTORY.

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26 USC 170 note.

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(a) INCREASED AMOUNT OF DEDUCTION.—
(1) IN GENERAL.—Clause (iv) of section 170(e)(3)(C) (relating
to termination) is amended by striking ‘‘December 31, 2007’’
and inserting ‘‘December 31, 2009’’.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to contributions made after December 31,
2007.
(b) TEMPORARY SUSPENSION OF LIMITATIONS ON CHARITABLE
CONTRIBUTIONS.—
(1) IN GENERAL.—Section 170(b) is amended by adding
at the end the following new paragraph:
‘‘(3) TEMPORARY SUSPENSION OF LIMITATIONS ON CHARITABLE CONTRIBUTIONS.—In the case of a qualified farmer or
rancher (as defined in paragraph (1)(E)(v)), any charitable contribution of food—
‘‘(A) to which subsection (e)(3)(C) applies (without
regard to clause (ii) thereof), and
‘‘(B) which is made during the period beginning on
the date of the enactment of this paragraph and before
January 1, 2009,
shall be treated for purposes of paragraph (1)(E) or (2)(B),
whichever is applicable, as if it were a qualified conservation
contribution which is made by a qualified farmer or rancher
and which otherwise meets the requirements of such paragraph.’’.

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(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to taxable years ending after the date of
the enactment of this Act.

26 USC 170 note.

SEC. 324. EXTENSION OF ENHANCED CHARITABLE DEDUCTION FOR
CONTRIBUTIONS OF BOOK INVENTORY.

(a) EXTENSION.—Clause (iv) of section 170(e)(3)(D) (relating
to termination) is amended by striking ‘‘December 31, 2007’’ and
inserting ‘‘December 31, 2009’’.
(b) CLERICAL AMENDMENT.—Clause (iii) of section 170(e)(3)(D)
(relating to certification by donee) is amended by inserting ‘‘of
books’’ after ‘‘to any contribution’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to contributions made after December 31, 2007.

26 USC 170.

26 USC 170 note.

SEC. 325. EXTENSION AND MODIFICATION OF DUTY SUSPENSION ON
WOOL PRODUCTS; WOOL RESEARCH FUND; WOOL DUTY
REFUNDS.

(a) EXTENSION OF TEMPORARY DUTY REDUCTIONS.—Each of the
following headings of the Harmonized Tariff Schedule of the United
States is amended by striking the date in the effective period
column and inserting ‘‘12/31/2014’’:
(1) Heading 9902.51.11 (relating to fabrics of worsted wool).
(2) Heading 9902.51.13 (relating to yarn of combed wool).
(3) Heading 9902.51.14 (relating to wool fiber, waste,
garnetted stock, combed wool, or wool top).
(4) Heading 9902.51.15 (relating to fabrics of combed wool).
(5) Heading 9902.51.16 (relating to fabrics of combed wool).
(b) EXTENSION OF DUTY REFUNDS AND WOOL RESEARCH TRUST
FUND.—
(1) IN GENERAL.—Section 4002(c) of the Wool Suit and
Textile Trade Extension Act of 2004 (Public Law 108–429;
118 Stat. 2603) is amended—
(A) in paragraph (3)(C), by striking ‘‘2010’’ and
inserting ‘‘2015’’; and
(B) in paragraph (6)(A), by striking ‘‘through 2009’’
and inserting ‘‘through 2014’’.
(2) SUNSET.—Section 506(f) of the Trade and Development
Act of 2000 (Public 106–200; 114 Stat. 303 (7 U.S.C. 7101
note)) is amended by striking ‘‘2010’’ and inserting ‘‘2015’’.

TITLE IV—EXTENSION OF TAX
ADMINISTRATION PROVISIONS
SEC. 401. PERMANENT AUTHORITY FOR UNDERCOVER OPERATIONS.

(a) IN GENERAL.—Section 7608(c) (relating to rules relating
to undercover operations) is amended by striking paragraph (6).
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to operations conducted after the date of the enactment
of this Act.

26 USC 7608
note.

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SEC. 402. PERMANENT AUTHORITY FOR DISCLOSURE OF INFORMATION RELATING TO TERRORIST ACTIVITIES.

(a) DISCLOSURE OF RETURN INFORMATION TO APPRISE APPROOFFICIALS OF TERRORIST ACTIVITIES.—Subparagraph (C) of
section 6103(i)(3) is amended by striking clause (iv).

PRIATE

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122 STAT. 3876
26 USC 6103.
26 USC 6103
note.

PUBLIC LAW 110–343—OCT. 3, 2008

(b) DISCLOSURE UPON REQUEST OF INFORMATION RELATING TO
TERRORIST ACTIVITIES.—Paragraph (7) of section 6103(i) is amended
by striking subparagraph (E).
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to disclosures after the date of the enactment of this
Act.

TITLE V—ADDITIONAL TAX RELIEF AND
OTHER TAX PROVISIONS
Subtitle A—General Provisions
SEC. 501. $8,500 INCOME THRESHOLD USED TO CALCULATE REFUNDABLE PORTION OF CHILD TAX CREDIT.

26 USC 24 note.

(a) IN GENERAL.—Section 24(d) is amended by adding at the
end the following new paragraph:
‘‘(4) SPECIAL RULE FOR 2008.—Notwithstanding paragraph
(3), in the case of any taxable year beginning in 2008, the
dollar amount in effect for such taxable year under paragraph
(1)(B)(i) shall be $8,500.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to taxable years beginning after December 31, 2007.

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SEC. 502. PROVISIONS RELATED TO FILM AND TELEVISION PRODUCTIONS.

(a) EXTENSION OF EXPENSING RULES FOR QUALIFIED FILM AND
TELEVISION PRODUCTIONS.—Section 181(f) (relating to termination)
is amended by striking ‘‘December 31, 2008’’ and inserting
‘‘December 31, 2009’’.
(b) MODIFICATION OF LIMITATION ON EXPENSING.—Subparagraph (A) of section 181(a)(2) is amended to read as follows:
‘‘(A) IN GENERAL.—Paragraph (1) shall not apply to
so much of the aggregate cost of any qualified film or
television production as exceeds $15,000,000.’’.
(c) MODIFICATIONS TO DEDUCTION FOR DOMESTIC ACTIVITIES.—
(1) DETERMINATION OF W–2 WAGES.—Paragraph (2) of section 199(b) is amended by adding at the end the following
new subparagraph:
‘‘(D) SPECIAL RULE FOR QUALIFIED FILM.—In the case
of a qualified film, such term shall include compensation
for services performed in the United States by actors,
production personnel, directors, and producers.’’.
(2) DEFINITION OF QUALIFIED FILM.—Paragraph (6) of section 199(c) is amended by adding at the end the following:
‘‘A qualified film shall include any copyrights, trademarks, or
other intangibles with respect to such film. The methods and
means of distributing a qualified film shall not affect the availability of the deduction under this section.’’.
(3) PARTNERSHIPS.—Subparagraph (A) of section 199(d)(1)
is amended by striking ‘‘and’’ at the end of clause (ii), by
striking the period at the end of clause (iii) and inserting
‘‘, and’’, and by adding at the end the following new clause:
‘‘(iv) in the case of each partner of a partnership,
or shareholder of an S corporation, who owns (directly
or indirectly) at least 20 percent of the capital interests

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122 STAT. 3877

in such partnership or of the stock of such S corporation—
‘‘(I) such partner or shareholder shall be
treated as having engaged directly in any film
produced by such partnership or S corporation,
and
‘‘(II) such partnership or S corporation shall
be treated as having engaged directly in any film
produced by such partner or shareholder.’’.
(d) CONFORMING AMENDMENT.—Section 181(d)(3)(A) is amended
by striking ‘‘actors’’ and all that follows and inserting ‘‘actors,
production personnel, directors, and producers.’’.
(e) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to
qualified film and television productions commencing after
December 31, 2007.
(2) DEDUCTION.—The amendments made by subsection (c)
shall apply to taxable years beginning after December 31, 2007.

26 USC 181.

26 USC 181 note.

SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN
ARROWS DESIGNED FOR USE BY CHILDREN.

(a) IN GENERAL.—Paragraph (2) of section 4161(b) is amended
by redesignating subparagraph (B) as subparagraph (C) and by
inserting after subparagraph (A) the following new subparagraph:
‘‘(B) EXEMPTION FOR CERTAIN WOODEN ARROW
SHAFTS.—Subparagraph (A) shall not apply to any shaft
consisting of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether
sold separately or incorporated as part of a finished or
unfinished product) of a type used in the manufacture
of any arrow which after its assembly—
‘‘(i) measures 5⁄16 of an inch or less in diameter,
and
‘‘(ii) is not suitable for use with a bow described
in paragraph (1)(A).’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to shafts first sold after the date of enactment of
this Act.

26 USC 4161
note.

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SEC. 504. INCOME AVERAGING FOR AMOUNTS RECEIVED IN CONNECTION WITH THE EXXON VALDEZ LITIGATION.

(a) INCOME AVERAGING OF AMOUNTS RECEIVED FROM THE
EXXON VALDEZ LITIGATION.—For purposes of section 1301 of the
Internal Revenue Code of 1986—
(1) any qualified taxpayer who receives any qualified settlement income in any taxable year shall be treated as engaged
in a fishing business (determined without regard to the commercial nature of the business), and
(2) such qualified settlement income shall be treated as
income attributable to such a fishing business for such taxable
year.
(b) CONTRIBUTIONS OF AMOUNTS RECEIVED TO RETIREMENT
ACCOUNTS.—
(1) IN GENERAL.—Any qualified taxpayer who receives
qualified settlement income during the taxable year may, at
any time before the end of the taxable year in which such
income was received, make one or more contributions to an

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122 STAT. 3878

PUBLIC LAW 110–343—OCT. 3, 2008
eligible retirement plan of which such qualified taxpayer is
a beneficiary in an aggregate amount not to exceed the lesser
of—
(A) $100,000 (reduced by the amount of qualified settlement income contributed to an eligible retirement plan
in prior taxable years pursuant to this subsection), or
(B) the amount of qualified settlement income received
by the individual during the taxable year.
(2) TIME WHEN CONTRIBUTIONS DEEMED MADE.—For purposes of paragraph (1), a qualified taxpayer shall be deemed
to have made a contribution to an eligible retirement plan
on the last day of the taxable year in which such income
is received if the contribution is made on account of such
taxable year and is made not later than the time prescribed
by law for filing the return for such taxable year (not including
extensions thereof).
(3) TREATMENT OF CONTRIBUTIONS TO ELIGIBLE RETIREMENT
PLANS.—For purposes of the Internal Revenue Code of 1986,
if a contribution is made pursuant to paragraph (1) with respect
to qualified settlement income, then—
(A) except as provided in paragraph (4)—
(i) to the extent of such contribution, the qualified
settlement income shall not be included in taxable
income, and
(ii) for purposes of section 72 of such Code, such
contribution shall not be considered to be investment
in the contract,
(B) the qualified taxpayer shall, to the extent of the
amount of the contribution, be treated—
(i) as having received the qualified settlement
income—
(I) in the case of a contribution to an individual
retirement plan (as defined under section
7701(a)(37) of such Code), in a distribution
described in section 408(d)(3) of such Code, and
(II) in the case of any other eligible retirement
plan, in an eligible rollover distribution (as defined
under section 402(f)(2) of such Code), and
(ii) as having transferred the amount to the eligible
retirement plan in a direct trustee to trustee transfer
within 60 days of the distribution,
(C) section 408(d)(3)(B) of the Internal Revenue Code
of 1986 shall not apply with respect to amounts treated
as a rollover under this paragraph, and
(D) section 408A(c)(3)(B) of the Internal Revenue Code
of 1986 shall not apply with respect to amounts contributed
to a Roth IRA (as defined under section 408A(b) of such
Code) or a designated Roth contribution to an applicable
retirement plan (within the meaning of section 402A of
such Code) under this paragraph.
(4) SPECIAL RULE FOR ROTH IRAS AND ROTH 401(k)S.—For
purposes of the Internal Revenue Code of 1986, if a contribution
is made pursuant to paragraph (1) with respect to qualified
settlement income to a Roth IRA (as defined under section
408A(b) of such Code) or as a designated Roth contribution
to an applicable retirement plan (within the meaning of section
402A of such Code), then—

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122 STAT. 3879

(A) the qualified settlement income shall be includible
in taxable income, and
(B) for purposes of section 72 of such Code, such contribution shall be considered to be investment in the contract.
(5) ELIGIBLE RETIREMENT PLAN.—For purpose of this subsection, the term ‘‘eligible retirement plan’’ has the meaning
given such term under section 402(c)(8)(B) of the Internal Revenue Code of 1986.
(c) TREATMENT OF QUALIFIED SETTLEMENT INCOME UNDER
EMPLOYMENT TAXES.—
(1) SECA.—For purposes of chapter 2 of the Internal Revenue Code of 1986 and section 211 of the Social Security Act,
no portion of qualified settlement income received by a qualified
taxpayer shall be treated as self-employment income.
(2) FICA.—For purposes of chapter 21 of the Internal Revenue Code of 1986 and section 209 of the Social Security Act,
no portion of qualified settlement income received by a qualified
taxpayer shall be treated as wages.
(d) QUALIFIED TAXPAYER.—For purposes of this section, the
term ‘‘qualified taxpayer’’ means—
(1) any individual who is a plaintiff in the civil action
In re Exxon Valdez, No. 89–095–CV (HRH) (Consolidated) (D.
Alaska); or
(2) any individual who is a beneficiary of the estate of
such a plaintiff who—
(A) acquired the right to receive qualified settlement
income from that plaintiff; and
(B) was the spouse or an immediate relative of that
plaintiff.
(e) QUALIFIED SETTLEMENT INCOME.—For purposes of this section, the term ‘‘qualified settlement income’’ means any interest
and punitive damage awards which are—
(1) otherwise includible in taxable income, and
(2) received (whether as lump sums or periodic payments)
in connection with the civil action In re Exxon Valdez, No.
89–095–CV (HRH) (Consolidated) (D. Alaska) (whether preor post-judgment and whether related to a settlement or judgment).

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SEC. 505. CERTAIN FARMING BUSINESS MACHINERY AND EQUIPMENT
TREATED AS 5-YEAR PROPERTY.

(a) IN GENERAL.—Section 168(e)(3)(B) (defining 5-year property)
is amended by striking ‘‘and’’ at the end of clause (v), by striking
the period at the end of clause (vi)(III) and inserting ‘‘, and’’,
and by inserting after clause (vi) the following new clause:
‘‘(vii) any machinery or equipment (other than any
grain bin, cotton ginning asset, fence, or other land
improvement) which is used in a farming business
(as defined in section 263A(e)(4)), the original use of
which commences with the taxpayer after December
31, 2008, and which is placed in service before January
1, 2010.’’.
(b) ALTERNATIVE SYSTEM.—The table contained in section
168(g)(3)(B) (relating to special rule for certain property assigned
to classes) is amended by inserting after the item relating to
subparagraph (B)(iii) the following:

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26 USC 168.

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122 STAT. 3880

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(B)(vii) ........................................................................
26 USC 168 note.

10’’.

(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to property placed in service after December 31, 2008.
SEC. 506. MODIFICATION OF PENALTY ON UNDERSTATEMENT OF TAXPAYER’S LIABILITY BY TAX RETURN PREPARER.

26 USC 6694.

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26 USC 6694
note.

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(a) IN GENERAL.—Subsection (a) of section 6694 is amended
to read as follows:
‘‘(a) UNDERSTATEMENT DUE TO UNREASONABLE POSITIONS.—
‘‘(1) IN GENERAL.—If a tax return preparer—
‘‘(A) prepares any return or claim of refund with respect
to which any part of an understatement of liability is
due to a position described in paragraph (2), and
‘‘(B) knew (or reasonably should have known) of the
position,
such tax return preparer shall pay a penalty with respect
to each such return or claim in an amount equal to the greater
of $1,000 or 50 percent of the income derived (or to be derived)
by the tax return preparer with respect to the return or claim.
‘‘(2) UNREASONABLE POSITION.—
‘‘(A) IN GENERAL.—Except as otherwise provided in
this paragraph, a position is described in this paragraph
unless there is or was substantial authority for the position.
‘‘(B) DISCLOSED POSITIONS.—If the position was disclosed as provided in section 6662(d)(2)(B)(ii)(I) and is not
a position to which subparagraph (C) applies, the position
is described in this paragraph unless there is a reasonable
basis for the position.
‘‘(C) TAX SHELTERS AND REPORTABLE TRANSACTIONS.—
If the position is with respect to a tax shelter (as defined
in section 6662(d)(2)(C)(ii)) or a reportable transaction to
which section 6662A applies, the position is described in
this paragraph unless it is reasonable to believe that the
position would more likely than not be sustained on its
merits.
‘‘(3) REASONABLE CAUSE EXCEPTION.—No penalty shall be
imposed under this subsection if it is shown that there is
reasonable cause for the understatement and the tax return
preparer acted in good faith.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply—
(1) in the case of a position other than a position described
in subparagraph (C) of section 6694(a)(2) of the Internal Revenue Code of 1986 (as amended by this section), to returns
prepared after May 25, 2007, and
(2) in the case of a position described in such subparagraph
(C), to returns prepared for taxable years ending after the
date of the enactment of this Act.

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122 STAT. 3881

Subtitle B—Paul Wellstone and Pete
Domenici Mental Health Parity and Addiction Equity Act of 2008
SEC. 511. SHORT TITLE.

Paul Wellstone
and Pete
Domenici Mental
Health Parity and
Addiction Equity
Act of 2008.
42 USC 201 note.

This subtitle may be cited as the ‘‘Paul Wellstone and Pete
Domenici Mental Health Parity and Addiction Equity Act of 2008’’.

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SEC. 512. MENTAL HEALTH PARITY.

(a) AMENDMENTS TO ERISA.—Section 712 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1185a) is
amended—
(1) in subsection (a), by adding at the end the following:
‘‘(3) FINANCIAL REQUIREMENTS AND TREATMENT LIMITATIONS.—
‘‘(A) IN GENERAL.—In the case of a group health plan
(or health insurance coverage offered in connection with
such a plan) that provides both medical and surgical benefits and mental health or substance use disorder benefits,
such plan or coverage shall ensure that—
‘‘(i) the financial requirements applicable to such
mental health or substance use disorder benefits are
no more restrictive than the predominant financial
requirements applied to substantially all medical and
surgical benefits covered by the plan (or coverage),
and there are no separate cost sharing requirements
that are applicable only with respect to mental health
or substance use disorder benefits; and
‘‘(ii) the treatment limitations applicable to such
mental health or substance use disorder benefits are
no more restrictive than the predominant treatment
limitations applied to substantially all medical and
surgical benefits covered by the plan (or coverage) and
there are no separate treatment limitations that are
applicable only with respect to mental health or substance use disorder benefits.
‘‘(B) DEFINITIONS.—In this paragraph:
‘‘(i) FINANCIAL REQUIREMENT.—The term ‘financial
requirement’
includes
deductibles,
copayments,
coinsurance, and out-of-pocket expenses, but excludes
an aggregate lifetime limit and an annual limit subject
to paragraphs (1) and (2),
‘‘(ii) PREDOMINANT.—A financial requirement or
treatment limit is considered to be predominant if it
is the most common or frequent of such type of limit
or requirement.
‘‘(iii) TREATMENT LIMITATION.—The term ‘treatment limitation’ includes limits on the frequency of
treatment, number of visits, days of coverage, or other
similar limits on the scope or duration of treatment.
‘‘(4) AVAILABILITY OF PLAN INFORMATION.—The criteria for
medical necessity determinations made under the plan with
respect to mental health or substance use disorder benefits
(or the health insurance coverage offered in connection with
the plan with respect to such benefits) shall be made available

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122 STAT. 3882

PUBLIC LAW 110–343—OCT. 3, 2008
by the plan administrator (or the health insurance issuer
offering such coverage) in accordance with regulations to any
current or potential participant, beneficiary, or contracting provider upon request. The reason for any denial under the plan
(or coverage) of reimbursement or payment for services with
respect to mental health or substance use disorder benefits
in the case of any participant or beneficiary shall, on request
or as otherwise required, be made available by the plan
administrator (or the health insurance issuer offering such
coverage) to the participant or beneficiary in accordance with
regulations.
‘‘(5) OUT-OF-NETWORK PROVIDERS.—In the case of a plan
or coverage that provides both medical and surgical benefits
and mental health or substance use disorder benefits, if the
plan or coverage provides coverage for medical or surgical benefits provided by out-of-network providers, the plan or coverage
shall provide coverage for mental health or substance use disorder benefits provided by out-of-network providers in a manner
that is consistent with the requirements of this section.’’;
(2) in subsection (b), by amending paragraph (2) to read
as follows:
‘‘(2) in the case of a group health plan (or health insurance
coverage offered in connection with such a plan) that provides
mental health or substance use disorder benefits, as affecting
the terms and conditions of the plan or coverage relating to
such benefits under the plan or coverage, except as provided
in subsection (a).’’;
(3) in subsection (c)—
(A) in paragraph (1)(B)—
(i) by inserting ‘‘(or 1 in the case of an employer
residing in a State that permits small groups to include
a single individual)’’ after ‘‘at least 2’’ the first place
that such appears; and
(ii) by striking ‘‘and who employs at least 2
employees on the first day of the plan year’’; and
(B) by striking paragraph (2) and inserting the following:
‘‘(2) COST EXEMPTION.—
‘‘(A) IN GENERAL.—With respect to a group health plan
(or health insurance coverage offered in connection with
such a plan), if the application of this section to such
plan (or coverage) results in an increase for the plan year
involved of the actual total costs of coverage with respect
to medical and surgical benefits and mental health and
substance use disorder benefits under the plan (as determined and certified under subparagraph (C)) by an amount
that exceeds the applicable percentage described in
subparagraph (B) of the actual total plan costs, the provisions of this section shall not apply to such plan (or coverage) during the following plan year, and such exemption
shall apply to the plan (or coverage) for 1 plan year. An
employer may elect to continue to apply mental health
and substance use disorder parity pursuant to this section
with respect to the group health plan (or coverage) involved
regardless of any increase in total costs.

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3883

‘‘(B) APPLICABLE PERCENTAGE.—With respect to a plan
(or coverage), the applicable percentage described in this
subparagraph shall be—
‘‘(i) 2 percent in the case of the first plan year
in which this section is applied; and
‘‘(ii) 1 percent in the case of each subsequent plan
year.
‘‘(C) DETERMINATIONS BY ACTUARIES.—Determinations
as to increases in actual costs under a plan (or coverage)
for purposes of this section shall be made and certified
by a qualified and licensed actuary who is a member in
good standing of the American Academy of Actuaries. All
such determinations shall be in a written report prepared
by the actuary. The report, and all underlying documentation relied upon by the actuary, shall be maintained by
the group health plan or health insurance issuer for a
period of 6 years following the notification made under
subparagraph (E).
‘‘(D) 6-MONTH DETERMINATIONS.—If a group health plan
(or a health insurance issuer offering coverage in connection
with a group health plan) seeks an exemption under this
paragraph, determinations under subparagraph (A) shall
be made after such plan (or coverage) has complied with
this section for the first 6 months of the plan year involved.
‘‘(E) NOTIFICATION.—
‘‘(i) IN GENERAL.—A group health plan (or a health
insurance issuer offering coverage in connection with
a group health plan) that, based upon a certification
described under subparagraph (C), qualifies for an
exemption under this paragraph, and elects to implement the exemption, shall promptly notify the Secretary, the appropriate State agencies, and participants
and beneficiaries in the plan of such election.
‘‘(ii) REQUIREMENT.—A notification to the Secretary
under clause (i) shall include—
‘‘(I) a description of the number of covered
lives under the plan (or coverage) involved at the
time of the notification, and as applicable, at the
time of any prior election of the cost-exemption
under this paragraph by such plan (or coverage);
‘‘(II) for both the plan year upon which a cost
exemption is sought and the year prior, a description of the actual total costs of coverage with
respect to medical and surgical benefits and
mental health and substance use disorder benefits
under the plan; and
‘‘(III) for both the plan year upon which a
cost exemption is sought and the year prior, the
actual total costs of coverage with respect to
mental health and substance use disorder benefits
under the plan.
‘‘(iii) CONFIDENTIALITY.—A notification to the Secretary under clause (i) shall be confidential. The Secretary shall make available, upon request and on not
more than an annual basis, an anonymous itemization
of such notifications, that includes—

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PUBLIC LAW 110–343—OCT. 3, 2008

‘‘(I) a breakdown of States by the size and
type of employers submitting such notification; and
‘‘(II) a summary of the data received under
clause (ii).
‘‘(F) AUDITS BY APPROPRIATE AGENCIES.—To determine
compliance with this paragraph, the Secretary may audit
the books and records of a group health plan or health
insurance issuer relating to an exemption, including any
actuarial reports prepared pursuant to subparagraph (C),
during the 6 year period following the notification of such
exemption under subparagraph (E). A State agency
receiving a notification under subparagraph (E) may also
conduct such an audit with respect to an exemption covered
by such notification.’’;
(4) in subsection (e), by striking paragraph (4) and inserting
the following:
‘‘(4) MENTAL HEALTH BENEFITS.—The term ‘mental health
benefits’ means benefits with respect to services for mental
health conditions, as defined under the terms of the plan and
in accordance with applicable Federal and State law.
‘‘(5) SUBSTANCE USE DISORDER BENEFITS.—The term ‘substance use disorder benefits’ means benefits with respect to
services for substance use disorders, as defined under the terms
of the plan and in accordance with applicable Federal and
State law.’’;
(5) by striking subsection (f);
(6) by inserting after subsection (e) the following:
‘‘(f) SECRETARY REPORT.—The Secretary shall, by January 1,
2012, and every two years thereafter, submit to the appropriate
committees of Congress a report on compliance of group health
plans (and health insurance coverage offered in connection with
such plans) with the requirements of this section. Such report
shall include the results of any surveys or audits on compliance
of group health plans (and health insurance coverage offered in
connection with such plans) with such requirements and an analysis
of the reasons for any failures to comply.
‘‘(g) NOTICE AND ASSISTANCE.—The Secretary, in cooperation
with the Secretaries of Health and Human Services and Treasury,
as appropriate, shall publish and widely disseminate guidance and
information for group health plans, participants and beneficiaries,
applicable State and local regulatory bodies, and the National
Association of Insurance Commissioners concerning the requirements of this section and shall provide assistance concerning such
requirements and the continued operation of applicable State law.
Such guidance and information shall inform participants and beneficiaries of how they may obtain assistance under this section,
including, where appropriate, assistance from State consumer and
insurance agencies.’’;
(7) by striking ‘‘mental health benefits’’ and inserting
‘‘mental health and substance use disorder benefits’’ each place
it appears in subsections (a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), and
(a)(2)(C); and
(8) by striking ‘‘mental health benefits’’ and inserting
‘‘mental health or substance use disorder benefits’’ each place
it appears (other than in any provision amended by the previous
paragraph).

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3885

(b) AMENDMENTS TO PUBLIC HEALTH SERVICE ACT.—Section
2705 of the Public Health Service Act (42 U.S.C. 300gg–5) is
amended—
(1) in subsection (a), by adding at the end the following:
‘‘(3) FINANCIAL REQUIREMENTS AND TREATMENT LIMITATIONS.—
‘‘(A) IN GENERAL.—In the case of a group health plan
(or health insurance coverage offered in connection with
such a plan) that provides both medical and surgical benefits and mental health or substance use disorder benefits,
such plan or coverage shall ensure that—
‘‘(i) the financial requirements applicable to such
mental health or substance use disorder benefits are
no more restrictive than the predominant financial
requirements applied to substantially all medical and
surgical benefits covered by the plan (or coverage),
and there are no separate cost sharing requirements
that are applicable only with respect to mental health
or substance use disorder benefits; and
‘‘(ii) the treatment limitations applicable to such
mental health or substance use disorder benefits are
no more restrictive than the predominant treatment
limitations applied to substantially all medical and
surgical benefits covered by the plan (or coverage) and
there are no separate treatment limitations that are
applicable only with respect to mental health or substance use disorder benefits.
‘‘(B) DEFINITIONS.—In this paragraph:
‘‘(i) FINANCIAL REQUIREMENT.—The term ‘financial
requirement’
includes
deductibles,
copayments,
coinsurance, and out-of-pocket expenses, but excludes
an aggregate lifetime limit and an annual limit subject
to paragraphs (1) and (2).
‘‘(ii) PREDOMINANT.—A financial requirement or
treatment limit is considered to be predominant if it
is the most common or frequent of such type of limit
or requirement.
‘‘(iii) TREATMENT LIMITATION.—The term ‘treatment limitation’ includes limits on the frequency of
treatment, number of visits, days of coverage, or other
similar limits on the scope or duration of treatment.
‘‘(4) AVAILABILITY OF PLAN INFORMATION.—The criteria for
medical necessity determinations made under the plan with
respect to mental health or substance use disorder benefits
(or the health insurance coverage offered in connection with
the plan with respect to such benefits) shall be made available
by the plan administrator (or the health insurance issuer
offering such coverage) in accordance with regulations to any
current or potential participant, beneficiary, or contracting provider upon request. The reason for any denial under the plan
(or coverage) of reimbursement or payment for services with
respect to mental health or substance use disorder benefits
in the case of any participant or beneficiary shall, on request
or as otherwise required, be made available by the plan
administrator (or the health insurance issuer offering such
coverage) to the participant or beneficiary in accordance with
regulations.

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122 STAT. 3886

‘‘(5) OUT-OF-NETWORK PROVIDERS.—In the case of a plan
or coverage that provides both medical and surgical benefits
and mental health or substance use disorder benefits, if the
plan or coverage provides coverage for medical or surgical benefits provided by out-of-network providers, the plan or coverage
shall provide coverage for mental health or substance use disorder benefits provided by out-of-network providers in a manner
that is consistent with the requirements of this section.’’;
(2) in subsection (b), by amending paragraph (2) to read
as follows:
‘‘(2) in the case of a group health plan (or health insurance
coverage offered in connection with such a plan) that provides
mental health or substance use disorder benefits, as affecting
the terms and conditions of the plan or coverage relating to
such benefits under the plan or coverage, except as provided
in subsection (a).’’;
(3) in subsection (c)—
(A) in paragraph (1), by inserting before the period
the following: ‘‘(as defined in section 2791(e)(4), except that
for purposes of this paragraph such term shall include
employers with 1 employee in the case of an employer
residing in a State that permits small groups to include
a single individual)’’; and
(B) by striking paragraph (2) and inserting the following:
‘‘(2) COST EXEMPTION.—
‘‘(A) IN GENERAL.—With respect to a group health plan
(or health insurance coverage offered in connection with
such a plan), if the application of this section to such
plan (or coverage) results in an increase for the plan year
involved of the actual total costs of coverage with respect
to medical and surgical benefits and mental health and
substance use disorder benefits under the plan (as determined and certified under subparagraph (C)) by an amount
that exceeds the applicable percentage described in
subparagraph (B) of the actual total plan costs, the provisions of this section shall not apply to such plan (or coverage) during the following plan year, and such exemption
shall apply to the plan (or coverage) for 1 plan year. An
employer may elect to continue to apply mental health
and substance use disorder parity pursuant to this section
with respect to the group health plan (or coverage) involved
regardless of any increase in total costs.
‘‘(B) APPLICABLE PERCENTAGE.—With respect to a plan
(or coverage), the applicable percentage described in this
subparagraph shall be—
‘‘(i) 2 percent in the case of the first plan year
in which this section is applied; and
‘‘(ii) 1 percent in the case of each subsequent plan
year.
‘‘(C) DETERMINATIONS BY ACTUARIES.—Determinations
as to increases in actual costs under a plan (or coverage)
for purposes of this section shall be made and certified
by a qualified and licensed actuary who is a member in
good standing of the American Academy of Actuaries. All
such determinations shall be in a written report prepared

Reports.

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122 STAT. 3887

by the actuary. The report, and all underlying documentation relied upon by the actuary, shall be maintained by
the group health plan or health insurance issuer for a
period of 6 years following the notification made under
subparagraph (E).
‘‘(D) 6-MONTH DETERMINATIONS.—If a group health plan
(or a health insurance issuer offering coverage in connection
with a group health plan) seeks an exemption under this
paragraph, determinations under subparagraph (A) shall
be made after such plan (or coverage) has complied with
this section for the first 6 months of the plan year involved.
‘‘(E) NOTIFICATION.—
‘‘(i) IN GENERAL.—A group health plan (or a health
insurance issuer offering coverage in connection with
a group health plan) that, based upon a certification
described under subparagraph (C), qualifies for an
exemption under this paragraph, and elects to implement the exemption, shall promptly notify the Secretary, the appropriate State agencies, and participants
and beneficiaries in the plan of such election.
‘‘(ii) REQUIREMENT.—A notification to the Secretary
under clause (i) shall include—
‘‘(I) a description of the number of covered
lives under the plan (or coverage) involved at the
time of the notification, and as applicable, at the
time of any prior election of the cost-exemption
under this paragraph by such plan (or coverage);
‘‘(II) for both the plan year upon which a cost
exemption is sought and the year prior, a description of the actual total costs of coverage with
respect to medical and surgical benefits and
mental health and substance use disorder benefits
under the plan; and
‘‘(III) for both the plan year upon which a
cost exemption is sought and the year prior, the
actual total costs of coverage with respect to
mental health and substance use disorder benefits
under the plan.
‘‘(iii) CONFIDENTIALITY.—A notification to the Secretary under clause (i) shall be confidential. The Secretary shall make available, upon request and on not
more than an annual basis, an anonymous itemization
of such notifications, that includes—
‘‘(I) a breakdown of States by the size and
type of employers submitting such notification; and
‘‘(II) a summary of the data received under
clause (ii).
‘‘(F) AUDITS BY APPROPRIATE AGENCIES.—To determine
compliance with this paragraph, the Secretary may audit
the books and records of a group health plan or health
insurance issuer relating to an exemption, including any
actuarial reports prepared pursuant to subparagraph (C),
during the 6 year period following the notification of such
exemption under subparagraph (E). A State agency
receiving a notification under subparagraph (E) may also
conduct such an audit with respect to an exemption covered
by such notification.’’;

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26 USC 9812.

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PUBLIC LAW 110–343—OCT. 3, 2008

(4) in subsection (e), by striking paragraph (4) and inserting
the following:
‘‘(4) MENTAL HEALTH BENEFITS.—The term ‘mental health
benefits’ means benefits with respect to services for mental
health conditions, as defined under the terms of the plan and
in accordance with applicable Federal and State law.
‘‘(5) SUBSTANCE USE DISORDER BENEFITS.—The term ‘substance use disorder benefits’ means benefits with respect to
services for substance use disorders, as defined under the terms
of the plan and in accordance with applicable Federal and
State law.’’;
(5) by striking subsection (f);
(6) by striking ‘‘mental health benefits’’ and inserting
‘‘mental health and substance use disorder benefits’’ each place
it appears in subsections (a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), and
(a)(2)(C); and
(7) by striking ‘‘mental health benefits’’ and inserting
‘‘mental health or substance use disorder benefits’’ each place
it appears (other than in any provision amended by the previous
paragraph).
(c) AMENDMENTS TO INTERNAL REVENUE CODE.—Section 9812
of the Internal Revenue Code of 1986 is amended—
(1) in subsection (a), by adding at the end the following:
‘‘(3) FINANCIAL REQUIREMENTS AND TREATMENT LIMITATIONS.—
‘‘(A) IN GENERAL.—In the case of a group health plan
that provides both medical and surgical benefits and mental
health or substance use disorder benefits, such plan shall
ensure that—
‘‘(i) the financial requirements applicable to such
mental health or substance use disorder benefits are
no more restrictive than the predominant financial
requirements applied to substantially all medical and
surgical benefits covered by the plan, and there are
no separate cost sharing requirements that are
applicable only with respect to mental health or substance use disorder benefits; and
‘‘(ii) the treatment limitations applicable to such
mental health or substance use disorder benefits are
no more restrictive than the predominant treatment
limitations applied to substantially all medical and
surgical benefits covered by the plan and there are
no separate treatment limitations that are applicable
only with respect to mental health or substance use
disorder benefits.
‘‘(B) DEFINITIONS.—In this paragraph:
‘‘(i) FINANCIAL REQUIREMENT.—The term ‘financial
requirement’
includes
deductibles,
copayments,
coinsurance, and out-of-pocket expenses, but excludes
an aggregate lifetime limit and an annual limit subject
to paragraphs (1) and (2),
‘‘(ii) PREDOMINANT.—A financial requirement or
treatment limit is considered to be predominant if it
is the most common or frequent of such type of limit
or requirement.
‘‘(iii) TREATMENT LIMITATION.—The term ‘treatment limitation’ includes limits on the frequency of

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122 STAT. 3889

treatment, number of visits, days of coverage, or other
similar limits on the scope or duration of treatment.
‘‘(4) AVAILABILITY OF PLAN INFORMATION.—The criteria for
medical necessity determinations made under the plan with
respect to mental health or substance use disorder benefits
shall be made available by the plan administrator in accordance
with regulations to any current or potential participant, beneficiary, or contracting provider upon request. The reason for
any denial under the plan of reimbursement or payment for
services with respect to mental health or substance use disorder
benefits in the case of any participant or beneficiary shall,
on request or as otherwise required, be made available by
the plan administrator to the participant or beneficiary in
accordance with regulations.
‘‘(5) OUT-OF-NETWORK PROVIDERS.—In the case of a plan
that provides both medical and surgical benefits and mental
health or substance use disorder benefits, if the plan provides
coverage for medical or surgical benefits provided by out-ofnetwork providers, the plan shall provide coverage for mental
health or substance use disorder benefits provided by out-ofnetwork providers in a manner that is consistent with the
requirements of this section.’’;
(2) in subsection (b), by amending paragraph (2) to read
as follows:
‘‘(2) in the case of a group health plan that provides mental
health or substance use disorder benefits, as affecting the terms
and conditions of the plan relating to such benefits under
the plan, except as provided in subsection (a).’’;
(3) in subsection (c)—
(A) by amending paragraph (1) to read as follows:
‘‘(1) SMALL EMPLOYER EXEMPTION.—
‘‘(A) IN GENERAL.—This section shall not apply to any
group health plan for any plan year of a small employer.
‘‘(B) SMALL EMPLOYER.—For purposes of subparagraph
(A), the term ‘small employer’ means, with respect to a
calendar year and a plan year, an employer who employed
an average of at least 2 (or 1 in the case of an employer
residing in a State that permits small groups to include
a single individual) but not more than 50 employees on
business days during the preceding calendar year. For purposes of the preceding sentence, all persons treated as
a single employer under subsection (b), (c), (m), or (o)
of section 414 shall be treated as 1 employer and rules
similar to rules of subparagraphs (B) and (C) of section
4980D(d)(2) shall apply.’’; and
(B) by striking paragraph (2) and inserting the following:
‘‘(2) COST EXEMPTION.—
‘‘(A) IN GENERAL.—With respect to a group health plan,
if the application of this section to such plan results in
an increase for the plan year involved of the actual total
costs of coverage with respect to medical and surgical benefits and mental health and substance use disorder benefits
under the plan (as determined and certified under subparagraph (C)) by an amount that exceeds the applicable
percentage described in subparagraph (B) of the actual
total plan costs, the provisions of this section shall not

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122 STAT. 3890

apply to such plan during the following plan year, and
such exemption shall apply to the plan for 1 plan year.
An employer may elect to continue to apply mental health
and substance use disorder parity pursuant to this section
with respect to the group health plan involved regardless
of any increase in total costs.
‘‘(B) APPLICABLE PERCENTAGE.—With respect to a plan,
the applicable percentage described in this subparagraph
shall be—
‘‘(i) 2 percent in the case of the first plan year
in which this section is applied; and
‘‘(ii) 1 percent in the case of each subsequent plan
year.
‘‘(C) DETERMINATIONS BY ACTUARIES.—Determinations
as to increases in actual costs under a plan for purposes
of this section shall be made and certified by a qualified
and licensed actuary who is a member in good standing
of the American Academy of Actuaries. All such determinations shall be in a written report prepared by the actuary.
The report, and all underlying documentation relied upon
by the actuary, shall be maintained by the group health
plan for a period of 6 years following the notification made
under subparagraph (E).
‘‘(D) 6-MONTH DETERMINATIONS.—If a group health plan
seeks an exemption under this paragraph, determinations
under subparagraph (A) shall be made after such plan
has complied with this section for the first 6 months of
the plan year involved.
‘‘(E) NOTIFICATION.—
‘‘(i) IN GENERAL.—A group health plan that, based
upon a certification described under subparagraph (C),
qualifies for an exemption under this paragraph, and
elects to implement the exemption, shall promptly
notify the Secretary, the appropriate State agencies,
and participants and beneficiaries in the plan of such
election.
‘‘(ii) REQUIREMENT.—A notification to the Secretary
under clause (i) shall include—
‘‘(I) a description of the number of covered
lives under the plan involved at the time of the
notification, and as applicable, at the time of any
prior election of the cost-exemption under this
paragraph by such plan;
‘‘(II) for both the plan year upon which a cost
exemption is sought and the year prior, a description of the actual total costs of coverage with
respect to medical and surgical benefits and
mental health and substance use disorder benefits
under the plan; and
‘‘(III) for both the plan year upon which a
cost exemption is sought and the year prior, the
actual total costs of coverage with respect to
mental health and substance use disorder benefits
under the plan.
‘‘(iii) CONFIDENTIALITY.—A notification to the Secretary under clause (i) shall be confidential. The Secretary shall make available, upon request and on not

Reports.

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122 STAT. 3891

more than an annual basis, an anonymous itemization
of such notifications, that includes—
‘‘(I) a breakdown of States by the size and
type of employers submitting such notification; and
‘‘(II) a summary of the data received under
clause (ii).
‘‘(F) AUDITS BY APPROPRIATE AGENCIES.—To determine
compliance with this paragraph, the Secretary may audit
the books and records of a group health plan relating
to an exemption, including any actuarial reports prepared
pursuant to subparagraph (C), during the 6 year period
following the notification of such exemption under subparagraph (E). A State agency receiving a notification under
subparagraph (E) may also conduct such an audit with
respect to an exemption covered by such notification.’’;
(4) in subsection (e), by striking paragraph (4) and inserting
the following:
‘‘(4) MENTAL HEALTH BENEFITS.—The term ‘mental health
benefits’ means benefits with respect to services for mental
health conditions, as defined under the terms of the plan and
in accordance with applicable Federal and State law.
‘‘(5) SUBSTANCE USE DISORDER BENEFITS.—The term ‘substance use disorder benefits’ means benefits with respect to
services for substance use disorders, as defined under the terms
of the plan and in accordance with applicable Federal and
State law.’’;
(5) by striking subsection (f);
(6) by striking ‘‘mental health benefits’’ and inserting
‘‘mental health and substance use disorder benefits’’ each place
it appears in subsections (a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), and
(a)(2)(C); and
(7) by striking ‘‘mental health benefits’’ and inserting
‘‘mental health or substance use disorder benefits’’ each place
it appears (other than in any provision amended by the previous
paragraph).
(d) REGULATIONS.—Not later than 1 year after the date of
enactment of this Act, the Secretaries of Labor, Health and Human
Services, and the Treasury shall issue regulations to carry out
the amendments made by subsections (a), (b), and (c), respectively.
(e) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section
shall apply with respect to group health plans for plan years
beginning after the date that is 1 year after the date of enactment of this Act, regardless of whether regulations have been
issued to carry out such amendments by such effective date,
except that the amendments made by subsections (a)(5), (b)(5),
and (c)(5), relating to striking of certain sunset provisions,
shall take effect on January 1, 2009.
(2) SPECIAL RULE FOR COLLECTIVE BARGAINING AGREEMENTS.—In the case of a group health plan maintained pursuant to one or more collective bargaining agreements between
employee representatives and one or more employers ratified
before the date of the enactment of this Act, the amendments
made by this section shall not apply to plan years beginning
before the later of—

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Deadline.
42 USC 300gg–5
note.
42 USC 300gg–5
note.

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42 USC 300gg–5
note.

29 USC 1185a.

PUBLIC LAW 110–343—OCT. 3, 2008

(A) the date on which the last of the collective bargaining agreements relating to the plan terminates (determined without regard to any extension thereof agreed to
after the date of the enactment of this Act), or
(B) January 1, 2009.
For purposes of subparagraph (A), any plan amendment made
pursuant to a collective bargaining agreement relating to the
plan which amends the plan solely to conform to any requirement added by this section shall not be treated as a termination
of such collective bargaining agreement.
(f) ASSURING COORDINATION.—The Secretary of Health and
Human Services, the Secretary of Labor, and the Secretary of
the Treasury may ensure, through the execution or revision of
an interagency memorandum of understanding among such Secretaries, that—
(1) regulations, rulings, and interpretations issued by such
Secretaries relating to the same matter over which two or
more such Secretaries have responsibility under this section
(and the amendments made by this section) are administered
so as to have the same effect at all times; and
(2) coordination of policies relating to enforcing the same
requirements through such Secretaries in order to have a
coordinated enforcement strategy that avoids duplication of
enforcement efforts and assigns priorities in enforcement.
(g) CONFORMING CLERICAL AMENDMENTS.—
(1) ERISA HEADING.—
(A) IN GENERAL.—The heading of section 712 of the
Employee Retirement Income Security Act of 1974 is
amended to read as follows:
‘‘SEC. 712. PARITY IN MENTAL HEALTH AND SUBSTANCE USE DISORDER BENEFITS.’’.

(B) CLERICAL AMENDMENT.—The table of contents in
section 1 of such Act is amended by striking the item
relating to section 712 and inserting the following new
item:
‘‘Sec. 712. Parity in mental health and substance use disorder benefits.’’.

(2) PHSA HEADING.—The heading of section 2705 of the
Public Health Service Act is amended to read as follows:

42 USC 300gg–5.

‘‘SEC. 2705. PARITY IN MENTAL HEALTH AND SUBSTANCE USE DISORDER BENEFITS.’’.

(3) IRC HEADING.—
(A) IN GENERAL.—The heading of section 9812 of the
Internal Revenue Code of 1986 is amended to read as
follows:

26 USC 9812.

‘‘SEC. 9812. PARITY IN MENTAL HEALTH AND SUBSTANCE USE DISORDER BENEFITS.’’.

(B) CLERICAL AMENDMENT.—The table of sections for
subchapter B of chapter 100 of such Code is amended
by striking the item relating to section 9812 and inserting
the following new item:

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‘‘Sec. 9812. Parity in mental health and substance use disorder benefits.’’.

(h) GAO STUDY ON COVERAGE AND EXCLUSION
HEALTH AND SUBSTANCE USE DISORDER DIAGNOSES.—

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122 STAT. 3893

(1) IN GENERAL.—The Comptroller General of the United
States shall conduct a study that analyzes the specific rates,
patterns, and trends in coverage and exclusion of specific
mental health and substance use disorder diagnoses by health
plans and health insurance. The study shall include an analysis
of—
(A) specific coverage rates for all mental health conditions and substance use disorders;
(B) which diagnoses are most commonly covered or
excluded;
(C) whether implementation of this Act has affected
trends in coverage or exclusion of such diagnoses; and
(D) the impact of covering or excluding specific
diagnoses on participants’ and enrollees’ health, their
health care coverage, and the costs of delivering health
care.
(2) REPORTS.—Not later than 3 years after the date of
the enactment of this Act, and 2 years after the date of submission the first report under this paragraph, the Comptroller
General shall submit to Congress a report on the results of
the study conducted under paragraph (1).

TITLE VI—OTHER PROVISIONS
SEC. 601. SECURE RURAL SCHOOLS AND COMMUNITY SELF-DETERMINATION PROGRAM.

(a) REAUTHORIZATION OF THE SECURE RURAL SCHOOLS AND
COMMUNITY SELF-DETERMINATION ACT OF 2000.—The Secure Rural
Schools and Community Self-Determination Act of 2000 (16 U.S.C.
500 note; Public Law 106–393) is amended by striking sections
1 through 403 and inserting the following:

16 USC 500
notes.

‘‘SEC. 1. SHORT TITLE.

16 USC 7101
note.

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

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‘‘SEC. 2. PURPOSES.

16 USC 7101.

‘‘The purposes of this Act are—
‘‘(1) to stabilize and transition payments to counties to
provide funding for schools and roads that supplements other
available funds;
‘‘(2) to make additional investments in, and create additional employment opportunities through, projects that—
‘‘(A)(i) improve the maintenance of existing infrastructure;
‘‘(ii) implement stewardship objectives that enhance
forest ecosystems; and
‘‘(iii) restore and improve land health and water
quality;
‘‘(B) enjoy broad-based support; and
‘‘(C) have objectives that may include—
‘‘(i) road, trail, and infrastructure maintenance or
obliteration;
‘‘(ii) soil productivity improvement;
‘‘(iii) improvements in forest ecosystem health;
‘‘(iv) watershed restoration and maintenance;

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‘‘(v) the restoration, maintenance, and improvement of wildlife and fish habitat;
‘‘(vi) the control of noxious and exotic weeds; and
‘‘(vii) the reestablishment of native species; and
‘‘(3) to improve cooperative relationships among—
‘‘(A) the people that use and care for Federal land;
and
‘‘(B) the agencies that manage the Federal land.

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16 USC 7102.

‘‘SEC. 3. DEFINITIONS.

‘‘In this Act:
‘‘(1) ADJUSTED SHARE.—The term ‘adjusted share’ means
the number equal to the quotient obtained by dividing—
‘‘(A) the number equal to the quotient obtained by
dividing—
‘‘(i) the base share for the eligible county; by
‘‘(ii) the income adjustment for the eligible county;
by
‘‘(B) the number equal to the sum of the quotients
obtained under subparagraph (A) and paragraph (8)(A) for
all eligible counties.
‘‘(2) BASE SHARE.—The term ‘base share’ means the number
equal to the average of—
‘‘(A) the quotient obtained by dividing—
‘‘(i) the number of acres of Federal land described
in paragraph (7)(A) in each eligible county; by
‘‘(ii) the total number acres of Federal land in
all eligible counties in all eligible States; and
‘‘(B) the quotient obtained by dividing—
‘‘(i) the amount equal to the average of the 3
highest 25-percent payments and safety net payments
made to each eligible State for each eligible county
during the eligibility period; by
‘‘(ii) the amount equal to the sum of the amounts
calculated under clause (i) and paragraph (9)(B)(i) for
all eligible counties in all eligible States during the
eligibility period.
‘‘(3) COUNTY PAYMENT.—The term ‘county payment’ means
the payment for an eligible county calculated under section
101(b).
‘‘(4) ELIGIBLE COUNTY.—The term ‘eligible county’ means
any county that—
‘‘(A) contains Federal land (as defined in paragraph
(7)); and
‘‘(B) elects to receive a share of the State payment
or the county payment under section 102(b).
‘‘(5) ELIGIBILITY PERIOD.—The term ‘eligibility period’
means fiscal year 1986 through fiscal year 1999.
‘‘(6) ELIGIBLE STATE.—The term ‘eligible State’ means a
State or territory of the United States that received a 25percent payment for 1 or more fiscal years of the eligibility
period.
‘‘(7) FEDERAL LAND.—The term ‘Federal land’ means—
‘‘(A) land within the National Forest System, as defined
in section 11(a) of the Forest and Rangeland Renewable
Resources Planning Act of 1974 (16 U.S.C. 1609(a)) exclusive of the National Grasslands and land utilization

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122 STAT. 3895

projects designated as National Grasslands administered
pursuant to the Act of July 22, 1937 (7 U.S.C. 1010–
1012); and
‘‘(B) such portions of the revested Oregon and California Railroad and reconveyed Coos Bay Wagon Road
grant land as are or may hereafter come under the jurisdiction of the Department of the Interior, which have heretofore or may hereafter be classified as timberlands, and
power-site land valuable for timber, that shall be managed,
except as provided in the former section 3 of the Act of
August 28, 1937 (50 Stat. 875; 43 U.S.C. 1181c), for permanent forest production.
‘‘(8) 50-PERCENT ADJUSTED SHARE.—The term ‘50-percent
adjusted share’ means the number equal to the quotient
obtained by dividing—
‘‘(A) the number equal to the quotient obtained by
dividing—
‘‘(i) the 50-percent base share for the eligible
county; by
‘‘(ii) the income adjustment for the eligible county;
by
‘‘(B) the number equal to the sum of the quotients
obtained under subparagraph (A) and paragraph (1)(A) for
all eligible counties.
‘‘(9) 50-PERCENT BASE SHARE.—The term ‘50-percent base
share’ means the number equal to the average of—
‘‘(A) the quotient obtained by dividing—
‘‘(i) the number of acres of Federal land described
in paragraph (7)(B) in each eligible county; by
‘‘(ii) the total number acres of Federal land in
all eligible counties in all eligible States; and
‘‘(B) the quotient obtained by dividing—
‘‘(i) the amount equal to the average of the 3
highest 50-percent payments made to each eligible
county during the eligibility period; by
‘‘(ii) the amount equal to the sum of the amounts
calculated under clause (i) and paragraph (2)(B)(i) for
all eligible counties in all eligible States during the
eligibility period.
‘‘(10) 50-PERCENT PAYMENT.—The term ‘50-percent payment’ means the payment that is the sum of the 50-percent
share otherwise paid to a county pursuant to title II of the
Act of August 28, 1937 (chapter 876; 50 Stat. 875; 43 U.S.C.
1181f), and the payment made to a county pursuant to the
Act of May 24, 1939 (chapter 144; 53 Stat. 753; 43 U.S.C.
1181f–1 et seq.).
‘‘(11) FULL FUNDING AMOUNT.—The term ‘full funding
amount’ means—
‘‘(A) $500,000,000 for fiscal year 2008; and
‘‘(B) for fiscal year 2009 and each fiscal year thereafter,
the amount that is equal to 90 percent of the full funding
amount for the preceding fiscal year.
‘‘(12) INCOME ADJUSTMENT.—The term ‘income adjustment’
means the square of the quotient obtained by dividing—
‘‘(A) the per capita personal income for each eligible
county; by

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PUBLIC LAW 110–343—OCT. 3, 2008
‘‘(B) the median per capita personal income of all
eligible counties.
‘‘(13) PER CAPITA PERSONAL INCOME.—The term ‘per capita
personal income’ means the most recent per capita personal
income data, as determined by the Bureau of Economic Analysis.
‘‘(14) SAFETY NET PAYMENTS.—The term ‘safety net payments’ means the special payment amounts paid to States
and counties required by section 13982 or 13983 of the Omnibus
Budget Reconciliation Act of 1993 (Public Law 103–66; 16
U.S.C. 500 note; 43 U.S.C. 1181f note).
‘‘(15) SECRETARY CONCERNED.—The term ‘Secretary concerned’ means—
‘‘(A) the Secretary of Agriculture or the designee of
the Secretary of Agriculture with respect to the Federal
land described in paragraph (7)(A); and
‘‘(B) the Secretary of the Interior or the designee of
the Secretary of the Interior with respect to the Federal
land described in paragraph (7)(B).
‘‘(16) STATE PAYMENT.—The term ‘State payment’ means
the payment for an eligible State calculated under section
101(a).
‘‘(17) 25-PERCENT PAYMENT.—The term ‘25-percent payment’ means the payment to States required by the sixth paragraph under the heading of ‘FOREST SERVICE’ in the Act
of May 23, 1908 (35 Stat. 260; 16 U.S.C. 500), and section
13 of the Act of March 1, 1911 (36 Stat. 963; 16 U.S.C. 500).

‘‘TITLE I—SECURE PAYMENTS FOR
STATES AND COUNTIES CONTAINING
FEDERAL LAND
16 USC 7111.

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

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

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16 USC 7112.

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

‘‘(a) PAYMENT AMOUNTS.—Except as provided in section 103,
the Secretary of the Treasury shall pay to—
‘‘(1) a State or territory of the United States an amount
equal to the sum of the amounts elected under subsection
(b) by each county within the State or territory for—

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122 STAT. 3897

‘‘(A) if the county is eligible for the 25-percent payment,
the share of the 25-percent payment; or
‘‘(B) the share of the State payment of the eligible
county; and
‘‘(2) a county an amount equal to the amount elected under
subsection (b) by each county for—
‘‘(A) if the county is eligible for the 50-percent payment,
the 50-percent payment; or
‘‘(B) the county payment for the eligible county.
‘‘(b) ELECTION TO RECEIVE PAYMENT AMOUNT.—
‘‘(1) ELECTION; SUBMISSION OF RESULTS.—
‘‘(A) IN GENERAL.—The election to receive a share of
the State payment, the county payment, a share of the
State payment and the county payment, a share of the
25-percent payment, the 50-percent payment, or a share
of the 25-percent payment and the 50-percent payment,
as applicable, shall be made at the discretion of each
affected county by August 1, 2008 (or as soon thereafter
as the Secretary concerned determines is practicable), and
August 1 of each second fiscal year thereafter, in accordance
with paragraph (2), and transmitted to the Secretary concerned by the Governor of each eligible State.
‘‘(B) FAILURE TO TRANSMIT.—If an election for an
affected county is not transmitted to the Secretary concerned by the date specified under subparagraph (A), the
affected county shall be considered to have elected to
receive a share of the State payment, the county payment,
or a share of the State payment and the county payment,
as applicable.
‘‘(2) DURATION OF ELECTION.—
‘‘(A) IN GENERAL.—A county election to receive a share
of the 25-percent payment or 50-percent payment, as
applicable, shall be effective for 2 fiscal years.
‘‘(B) FULL FUNDING AMOUNT.—If a county elects to
receive a share of the State payment or the county payment, the election shall be effective for all subsequent
fiscal years through fiscal year 2011.
‘‘(3) SOURCE OF PAYMENT AMOUNTS.—The payment to an
eligible State or eligible county under this section for a fiscal
year shall be derived from—
‘‘(A) any amounts that are appropriated to carry out
this Act;
‘‘(B) any revenues, fees, penalties, or miscellaneous
receipts, exclusive of deposits to any relevant trust fund,
special account, or permanent operating funds, received
by the Federal Government from activities by the Bureau
of Land Management or the Forest Service on the
applicable Federal land; and
‘‘(C) to the extent of any shortfall, out of any amounts
in the Treasury of the United States not otherwise appropriated.
‘‘(c) DISTRIBUTION AND EXPENDITURE OF PAYMENTS.—
‘‘(1) DISTRIBUTION METHOD.—A State that receives a payment under subsection (a) for Federal land described in section
3(7)(A) shall distribute the appropriate payment amount among
the appropriate counties in the State in accordance with—
‘‘(A) the Act of May 23, 1908 (16 U.S.C. 500); and

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PUBLIC LAW 110–343—OCT. 3, 2008
‘‘(B) section 13 of the Act of March 1, 1911 (36 Stat.
963; 16 U.S.C. 500).
‘‘(2) EXPENDITURE PURPOSES.—Subject to subsection (d),
payments received by a State under subsection (a) and distributed to counties in accordance with paragraph (1) shall be
expended as required by the laws referred to in paragraph
(1).
‘‘(d) EXPENDITURE RULES FOR ELIGIBLE COUNTIES.—
‘‘(1) ALLOCATIONS.—
‘‘(A) USE OF PORTION IN SAME MANNER AS 25-PERCENT
PAYMENT OR 50-PERCENT PAYMENT, AS APPLICABLE.—Except
as provided in paragraph (3)(B), if an eligible county elects
to receive its share of the State payment or the county
payment, not less than 80 percent, but not more than
85 percent, of the funds shall be expended in the same
manner in which the 25-percent payments or 50-percent
payment, as applicable, are required to be expended.
‘‘(B) ELECTION AS TO USE OF BALANCE.—Except as provided in subparagraph (C), an eligible county shall elect
to do 1 or more of the following with the balance of any
funds not expended pursuant to subparagraph (A):
‘‘(i) Reserve any portion of the balance for projects
in accordance with title II.
‘‘(ii) Reserve not more than 7 percent of the total
share for the eligible county of the State payment
or the county payment for projects in accordance with
title III.
‘‘(iii) Return the portion of the balance not reserved
under clauses (i) and (ii) to the Treasury of the United
States.
‘‘(C) COUNTIES WITH MODEST DISTRIBUTIONS.—In the
case of each eligible county to which more than $100,000,
but less than $350,000, is distributed for any fiscal year
pursuant to either or both of paragraphs (1)(B) and (2)(B)
of subsection (a), the eligible county, with respect to the
balance of any funds not expended pursuant to subparagraph (A) for that fiscal year, shall—
‘‘(i) reserve any portion of the balance for—
‘‘(I) carrying out projects under title II;
‘‘(II) carrying out projects under title III; or
‘‘(III) a combination of the purposes described
in subclauses (I) and (II); or
‘‘(ii) return the portion of the balance not reserved
under clause (i) to the Treasury of the United States.
‘‘(2) DISTRIBUTION OF FUNDS.—
‘‘(A) IN GENERAL.—Funds reserved by an eligible county
under subparagraph (B)(i) or (C)(i) of paragraph (1) for
carrying out projects under title II shall be deposited in
a special account in the Treasury of the United States.
‘‘(B) AVAILABILITY.—Amounts deposited under subparagraph (A) shall—
‘‘(i) be available for expenditure by the Secretary
concerned, without further appropriation; and
‘‘(ii) remain available until expended in accordance
with title II.
‘‘(3) ELECTION.—
‘‘(A) NOTIFICATION.—

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122 STAT. 3899

‘‘(i) IN GENERAL.—An eligible county shall notify
the Secretary concerned of an election by the eligible
county under this subsection not later than September
30, 2008 (or as soon thereafter as the Secretary concerned determines is practicable), and each September
30 thereafter for each succeeding fiscal year.
‘‘(ii) FAILURE TO ELECT.—Except as provided in
subparagraph (B), if the eligible county fails to make
an election by the date specified in clause (i), the
eligible county shall—
‘‘(I) be considered to have elected to expend
85 percent of the funds in accordance with paragraph (1)(A); and
‘‘(II) return the balance to the Treasury of
the United States.
‘‘(B) COUNTIES WITH MINOR DISTRIBUTIONS.—In the case
of each eligible county to which less than $100,000 is
distributed for any fiscal year pursuant to either or both
of paragraphs (1)(B) and (2)(B) of subsection (a), the eligible
county may elect to expend all the funds in the same
manner in which the 25-percent payments or 50-percent
payments, as applicable, are required to be expended.
‘‘(e) TIME FOR PAYMENT.—The payments required under this
section for a fiscal year shall be made as soon as practicable
after the end of that fiscal year.

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‘‘SEC. 103. TRANSITION PAYMENTS TO STATES.

16 USC 7113.

‘‘(a) DEFINITIONS.—In this section:
‘‘(1) ADJUSTED AMOUNT.—The term ‘adjusted amount’
means, with respect to a covered State—
‘‘(A) for fiscal year 2008, 90 percent of—
‘‘(i) the sum of the amounts paid for fiscal year
2006 under section 102(a)(2) (as in effect on September
29, 2006) for the eligible counties in the covered State
that have elected under section 102(b) to receive a
share of the State payment for fiscal year 2008; and
‘‘(ii) the sum of the amounts paid for fiscal year
2006 under section 103(a)(2) (as in effect on September
29, 2006) for the eligible counties in the State of Oregon
that have elected under section 102(b) to receive the
county payment for fiscal year 2008;
‘‘(B) for fiscal year 2009, 81 percent of—
‘‘(i) the sum of the amounts paid for fiscal year
2006 under section 102(a)(2) (as in effect on September
29, 2006) for the eligible counties in the covered State
that have elected under section 102(b) to receive a
share of the State payment for fiscal year 2009; and
‘‘(ii) the sum of the amounts paid for fiscal year
2006 under section 103(a)(2) (as in effect on September
29, 2006) for the eligible counties in the State of Oregon
that have elected under section 102(b) to receive the
county payment for fiscal year 2009; and
‘‘(C) for fiscal year 2010, 73 percent of—
‘‘(i) the sum of the amounts paid for fiscal year
2006 under section 102(a)(2) (as in effect on September
29, 2006) for the eligible counties in the covered State

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that have elected under section 102(b) to receive a
share of the State payment for fiscal year 2010; and
‘‘(ii) the sum of the amounts paid for fiscal year
2006 under section 103(a)(2) (as in effect on September
29, 2006) for the eligible counties in the State of Oregon
that have elected under section 102(b) to receive the
county payment for fiscal year 2010.
‘‘(2) COVERED STATE.—The term ‘covered State’ means each
of the States of California, Louisiana, Oregon, Pennsylvania,
South Carolina, South Dakota, Texas, and Washington.
‘‘(b) TRANSITION PAYMENTS.—For each of fiscal years 2008
through 2010, in lieu of the payment amounts that otherwise would
have been made under paragraphs (1)(B) and (2)(B) of section
102(a), the Secretary of the Treasury shall pay the adjusted amount
to each covered State and the eligible counties within the covered
State, as applicable.
‘‘(c) DISTRIBUTION OF ADJUSTED AMOUNT.—Except as provided
in subsection (d), it is the intent of Congress that the method
of distributing the payments under subsection (b) among the counties in the covered States for each of fiscal years 2008 through
2010 be in the same proportion that the payments were distributed
to the eligible counties in fiscal year 2006.
‘‘(d) DISTRIBUTION OF PAYMENTS IN CALIFORNIA.—The following
payments shall be distributed among the eligible counties in the
State of California in the same proportion that payments under
section 102(a)(2) (as in effect on September 29, 2006) were distributed to the eligible counties for fiscal year 2006:
‘‘(1) Payments to the State of California under subsection
(b).
‘‘(2) The shares of the eligible counties of the State payment
for California under section 102 for fiscal year 2011.
‘‘(e) TREATMENT OF PAYMENTS.—For purposes of this Act, any
payment made under subsection (b) shall be considered to be a
payment made under section 102(a).

‘‘TITLE II—SPECIAL PROJECTS ON
FEDERAL LAND

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16 USC 7121.

‘‘SEC. 201. DEFINITIONS.

‘‘In this title:
‘‘(1) PARTICIPATING COUNTY.—The term ‘participating
county’ means an eligible county that elects under section
102(d) to expend a portion of the Federal funds received under
section 102 in accordance with this title.
‘‘(2) PROJECT FUNDS.—The term ‘project funds’ means all
funds an eligible county elects under section 102(d) to reserve
for expenditure in accordance with this title.
‘‘(3) RESOURCE ADVISORY COMMITTEE.—The term ‘resource
advisory committee’ means—
‘‘(A) an advisory committee established by the Secretary concerned under section 205; or
‘‘(B) an advisory committee determined by the Secretary concerned to meet the requirements of section 205.
‘‘(4) RESOURCE MANAGEMENT PLAN.—The term ‘resource
management plan’ means—

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‘‘(A) a land use plan prepared by the Bureau of Land
Management for units of the Federal land described in
section 3(7)(B) pursuant to section 202 of the Federal Land
Policy and Management Act of 1976 (43 U.S.C. 1712); or
‘‘(B) a land and resource management plan prepared
by the Forest Service for units of the National Forest
System pursuant to section 6 of the Forest and Rangeland
Renewable Resources Planning Act of 1974 (16 U.S.C.
1604).
‘‘SEC. 202. GENERAL LIMITATION ON USE OF PROJECT FUNDS.

16 USC 7122.

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

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‘‘SEC. 203. SUBMISSION OF PROJECT PROPOSALS.

16 USC 7123.

‘‘(a) SUBMISSION OF PROJECT PROPOSALS TO SECRETARY CONCERNED.—
‘‘(1) PROJECTS FUNDED USING PROJECT FUNDS.—Not later
than September 30 for fiscal year 2008 (or as soon thereafter
as the Secretary concerned determines is practicable), and each
September 30 thereafter for each succeeding fiscal year through
fiscal year 2011, each resource advisory committee shall submit
to the Secretary concerned a description of any projects that
the resource advisory committee proposes the Secretary undertake using any project funds reserved by eligible counties in
the area in which the resource advisory committee has
geographic jurisdiction.
‘‘(2) PROJECTS FUNDED USING OTHER FUNDS.—A resource
advisory committee may submit to the Secretary concerned
a description of any projects that the committee proposes the
Secretary undertake using funds from State or local governments, or from the private sector, other than project funds
and funds appropriated and otherwise available to do similar
work.
‘‘(3) JOINT PROJECTS.—Participating counties or other persons may propose to pool project funds or other funds, described
in paragraph (2), and jointly propose a project or group of
projects to a resource advisory committee established under
section 205.
‘‘(b) REQUIRED DESCRIPTION OF PROJECTS.—In submitting proposed projects to the Secretary concerned under subsection (a),
a resource advisory committee shall include in the description of
each proposed project the following information:
‘‘(1) The purpose of the project and a description of how
the project will meet the purposes of this title.
‘‘(2) The anticipated duration of the project.
‘‘(3) The anticipated cost of the project.
‘‘(4) The proposed source of funding for the project, whether
project funds or other funds.

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‘‘(5)(A) Expected outcomes, including how the project will
meet or exceed desired ecological conditions, maintenance objectives, or stewardship objectives.
‘‘(B) An estimate of the amount of any timber, forage,
and other commodities and other economic activity, including
jobs generated, if any, anticipated as part of the project.
‘‘(6) A detailed monitoring plan, including funding needs
and sources, that—
‘‘(A) tracks and identifies the positive or negative
impacts of the project, implementation, and provides for
validation monitoring; and
‘‘(B) includes an assessment of the following:
‘‘(i) Whether or not the project met or exceeded
desired ecological conditions; created local employment
or training opportunities, including summer youth jobs
programs such as the Youth Conservation Corps where
appropriate.
‘‘(ii) Whether the project improved the use of, or
added value to, any products removed from land consistent with the purposes of this title.
‘‘(7) An assessment that the project is to be in the public
interest.
‘‘(c) AUTHORIZED PROJECTS.—Projects proposed under subsection (a) shall be consistent with section 2.

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16 USC 7124.

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

‘‘(a) CONDITIONS FOR APPROVAL OF PROPOSED PROJECT.—The
Secretary concerned may make a decision to approve a project
submitted by a resource advisory committee under section 203
only if the proposed project satisfies each of the following conditions:
‘‘(1) The project complies with all applicable Federal laws
(including regulations).
‘‘(2) The project is consistent with the applicable resource
management plan and with any watershed or subsequent plan
developed pursuant to the resource management plan and
approved by the Secretary concerned.
‘‘(3) The project has been approved by the resource advisory
committee in accordance with section 205, including the procedures issued under subsection (e) of that section.
‘‘(4) A project description has been submitted by the
resource advisory committee to the Secretary concerned in
accordance with section 203.
‘‘(5) The project will improve the maintenance of existing
infrastructure, implement stewardship objectives that enhance
forest ecosystems, and restore and improve land health and
water quality.
‘‘(b) ENVIRONMENTAL REVIEWS.—
‘‘(1) REQUEST FOR PAYMENT BY COUNTY.—The Secretary
concerned may request the resource advisory committee submitting a proposed project to agree to the use of project funds
to pay for any environmental review, consultation, or compliance with applicable environmental laws required in connection
with the project.
‘‘(2) CONDUCT OF ENVIRONMENTAL REVIEW.—If a payment
is requested under paragraph (1) and the resource advisory
committee agrees to the expenditure of funds for this purpose,

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122 STAT. 3903

the Secretary concerned shall conduct environmental review,
consultation, or other compliance responsibilities in accordance
with Federal laws (including regulations).
‘‘(3) EFFECT OF REFUSAL TO PAY.—
‘‘(A) IN GENERAL.—If a resource advisory committee
does not agree to the expenditure of funds under paragraph
(1), the project shall be deemed withdrawn from further
consideration by the Secretary concerned pursuant to this
title.
‘‘(B) EFFECT OF WITHDRAWAL.—A withdrawal under
subparagraph (A) shall be deemed to be a rejection of
the project for purposes of section 207(c).
‘‘(c) DECISIONS OF SECRETARY CONCERNED.—
‘‘(1) REJECTION OF PROJECTS.—
‘‘(A) IN GENERAL.—A decision by the Secretary concerned to reject a proposed project shall be at the sole
discretion of the Secretary concerned.
‘‘(B) NO ADMINISTRATIVE APPEAL OR JUDICIAL REVIEW.—
Notwithstanding any other provision of law, a decision
by the Secretary concerned to reject a proposed project
shall not be subject to administrative appeal or judicial
review.
‘‘(C) NOTICE OF REJECTION.—Not later than 30 days
after the date on which the Secretary concerned makes
the rejection decision, the Secretary concerned shall notify
in writing the resource advisory committee that submitted
the proposed project of the rejection and the reasons for
rejection.
‘‘(2) NOTICE OF PROJECT APPROVAL.—The Secretary concerned shall publish in the Federal Register notice of each
project approved under subsection (a) if the notice would be
required had the project originated with the Secretary.
‘‘(d) SOURCE AND CONDUCT OF PROJECT.—Once the Secretary
concerned accepts a project for review under section 203, the acceptance shall be deemed a Federal action for all purposes.
‘‘(e) IMPLEMENTATION OF APPROVED PROJECTS.—
‘‘(1) COOPERATION.—Notwithstanding chapter 63 of title 31,
United States Code, using project funds the Secretary concerned
may enter into contracts, grants, and cooperative agreements
with States and local governments, private and nonprofit entities, and landowners and other persons to assist the Secretary
in carrying out an approved project.
‘‘(2) BEST VALUE CONTRACTING.—
‘‘(A) IN GENERAL.—For any project involving a contract
authorized by paragraph (1) the Secretary concerned may
elect a source for performance of the contract on a best
value basis.
‘‘(B) FACTORS.—The Secretary concerned shall determine best value based on such factors as—
‘‘(i) the technical demands and complexity of the
work to be done;
‘‘(ii)(I) the ecological objectives of the project; and
‘‘(II) the sensitivity of the resources being treated;
‘‘(iii) the past experience by the contractor with
the type of work being done, using the type of equipment proposed for the project, and meeting or
exceeding desired ecological conditions; and

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Notification.

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PUBLIC LAW 110–343—OCT. 3, 2008

‘‘(iv) the commitment of the contractor to hiring
highly qualified workers and local residents.
‘‘(3) MERCHANTABLE TIMBER CONTRACTING PILOT PROGRAM.—
‘‘(A) ESTABLISHMENT.—The Secretary concerned shall
establish a pilot program to implement a certain percentage
of approved projects involving the sale of merchantable
timber using separate contracts for—
‘‘(i) the harvesting or collection of merchantable
timber; and
‘‘(ii) the sale of the timber.
‘‘(B) ANNUAL PERCENTAGES.—Under the pilot program,
the Secretary concerned shall ensure that, on a nationwide
basis, not less than the following percentage of all approved
projects involving the sale of merchantable timber are
implemented using separate contracts:
‘‘(i) For fiscal year 2008, 35 percent.
‘‘(ii) For fiscal year 2009, 45 percent.
‘‘(iii) For each of fiscal years 2010 and 2011, 50
percent.
‘‘(C) INCLUSION IN PILOT PROGRAM.—The decision
whether to use separate contracts to implement a project
involving the sale of merchantable timber shall be made
by the Secretary concerned after the approval of the project
under this title.
‘‘(D) ASSISTANCE.—
‘‘(i) IN GENERAL.—The Secretary concerned may
use funds from any appropriated account available to
the Secretary for the Federal land to assist in the
administration of projects conducted under the pilot
program.
‘‘(ii) MAXIMUM AMOUNT OF ASSISTANCE.—The total
amount obligated under this subparagraph may not
exceed $1,000,000 for any fiscal year during which
the pilot program is in effect.
‘‘(E) REVIEW AND REPORT.—
‘‘(i) INITIAL REPORT.—Not later than September
30, 2010, the Comptroller General shall submit to the
Committees on Agriculture, Nutrition, and Forestry
and Energy and Natural Resources of the Senate and
the Committees on Agriculture and Natural Resources
of the House of Representatives a report assessing
the pilot program.
‘‘(ii) ANNUAL REPORT.—The Secretary concerned
shall submit to the Committees on Agriculture, Nutrition, and Forestry and Energy and Natural Resources
of the Senate and the Committees on Agriculture and
Natural Resources of the House of Representatives
an annual report describing the results of the pilot
program.
‘‘(f) REQUIREMENTS FOR PROJECT FUNDS.—The Secretary shall
ensure that at least 50 percent of all project funds be used for
projects that are primarily dedicated—
‘‘(1) to road maintenance, decommissioning, or obliteration;
or
‘‘(2) to restoration of streams and watersheds.

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‘‘SEC. 205. RESOURCE ADVISORY COMMITTEES.

16 USC 7125.

‘‘(a) ESTABLISHMENT AND PURPOSE OF RESOURCE ADVISORY
COMMITTEES.—
‘‘(1) ESTABLISHMENT.—The Secretary concerned shall establish and maintain resource advisory committees to perform
the duties in subsection (b), except as provided in paragraph
(4).
‘‘(2) PURPOSE.—The purpose of a resource advisory committee shall be—
‘‘(A) to improve collaborative relationships; and
‘‘(B) to provide advice and recommendations to the
land management agencies consistent with the purposes
of this title.
‘‘(3) ACCESS TO RESOURCE ADVISORY COMMITTEES.—To
ensure that each unit of Federal land has access to a resource
advisory committee, and that there is sufficient interest in
participation on a committee to ensure that membership can
be balanced in terms of the points of view represented and
the functions to be performed, the Secretary concerned may,
establish resource advisory committees for part of, or 1 or
more, units of Federal land.
‘‘(4) EXISTING ADVISORY COMMITTEES.—
‘‘(A) IN GENERAL.—An advisory committee that meets
the requirements of this section, a resource advisory committee established before September 29, 2006, or an
advisory committee determined by the Secretary concerned
before September 29, 2006, to meet the requirements of
this section may be deemed by the Secretary concerned
to be a resource advisory committee for the purposes of
this title.
‘‘(B) CHARTER.—A charter for a committee described
in subparagraph (A) that was filed on or before September
29, 2006, shall be considered to be filed for purposes of
this Act.
‘‘(C) BUREAU OF LAND MANAGEMENT ADVISORY COMMITTEES.—The Secretary of the Interior may deem a resource
advisory committee meeting the requirements of subpart
1784 of part 1780 of title 43, Code of Federal Regulations,
as a resource advisory committee for the purposes of this
title.
‘‘(b) DUTIES.—A resource advisory committee shall—
‘‘(1) review projects proposed under this title by participating counties and other persons;
‘‘(2) propose projects and funding to the Secretary concerned
under section 203;
‘‘(3) provide early and continuous coordination with appropriate land management agency officials in recommending
projects consistent with purposes of this Act under this title;
‘‘(4) provide frequent opportunities for citizens, organizations, tribes, land management agencies, and other interested
parties to participate openly and meaningfully, beginning at
the early stages of the project development process under this
title;
‘‘(5)(A) monitor projects that have been approved under
section 204; and
‘‘(B) advise the designated Federal official on the progress
of the monitoring efforts under subparagraph (A); and

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‘‘(6) make recommendations to the Secretary concerned for
any appropriate changes or adjustments to the projects being
monitored by the resource advisory committee.
‘‘(c) APPOINTMENT BY THE SECRETARY.—
‘‘(1) APPOINTMENT AND TERM.—
‘‘(A) IN GENERAL.—The Secretary concerned, shall
appoint the members of resource advisory committees for
a term of 4 years beginning on the date of appointment.
‘‘(B) REAPPOINTMENT.—The Secretary concerned may
reappoint members to subsequent 4-year terms.
‘‘(2) BASIC REQUIREMENTS.—The Secretary concerned shall
ensure that each resource advisory committee established meets
the requirements of subsection (d).
‘‘(3) INITIAL APPOINTMENT.—Not later than 180 days after
the date of the enactment of this Act, the Secretary concerned
shall make initial appointments to the resource advisory
committees.
‘‘(4) VACANCIES.—The Secretary concerned shall make
appointments to fill vacancies on any resource advisory committee as soon as practicable after the vacancy has occurred.
‘‘(5) COMPENSATION.—Members of the resource advisory
committees shall not receive any compensation.
‘‘(d) COMPOSITION OF ADVISORY COMMITTEE.—
‘‘(1) NUMBER.—Each resource advisory committee shall be
comprised of 15 members.
‘‘(2) COMMUNITY INTERESTS REPRESENTED.—Committee
members shall be representative of the interests of the following
3 categories:
‘‘(A) 5 persons that—
‘‘(i) represent organized labor or non-timber forest
product harvester groups;
‘‘(ii) represent developed outdoor recreation, off
highway vehicle users, or commercial recreation activities;
‘‘(iii) represent—
‘‘(I) energy and mineral development interests;
or
‘‘(II) commercial or recreational fishing
interests;
‘‘(iv) represent the commercial timber industry; or
‘‘(v) hold Federal grazing or other land use permits,
or represent nonindustrial private forest land owners,
within the area for which the committee is organized.
‘‘(B) 5 persons that represent—
‘‘(i) nationally recognized environmental organizations;
‘‘(ii) regionally or locally recognized environmental
organizations;
‘‘(iii) dispersed recreational activities;
‘‘(iv) archaeological and historical interests; or
‘‘(v) nationally or regionally recognized wild horse
and burro interest groups, wildlife or hunting organizations, or watershed associations.
‘‘(C) 5 persons that—
‘‘(i) hold State elected office (or a designee);
‘‘(ii) hold county or local elected office;

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‘‘(iii) represent American Indian tribes within or
adjacent to the area for which the committee is organized;
‘‘(iv) are school officials or teachers; or
‘‘(v) represent the affected public at large.
‘‘(3) BALANCED REPRESENTATION.—In appointing committee
members from the 3 categories in paragraph (2), the Secretary
concerned shall provide for balanced and broad representation
from within each category.
‘‘(4) GEOGRAPHIC DISTRIBUTION.—The members of a
resource advisory committee shall reside within the State in
which the committee has jurisdiction and, to extent practicable,
the Secretary concerned shall ensure local representation in
each category in paragraph (2).
‘‘(5) CHAIRPERSON.—A majority on each resource advisory
committee shall select the chairperson of the committee.
‘‘(e) APPROVAL PROCEDURES.—
‘‘(1) IN GENERAL.—Subject to paragraph (3), each resource
advisory committee shall establish procedures for proposing
projects to the Secretary concerned under this title.
‘‘(2) QUORUM.—A quorum must be present to constitute
an official meeting of the committee.
‘‘(3) APPROVAL BY MAJORITY OF MEMBERS.—A project may
be proposed by a resource advisory committee to the Secretary
concerned under section 203(a), if the project has been approved
by a majority of members of the committee from each of the
3 categories in subsection (d)(2).
‘‘(f) OTHER COMMITTEE AUTHORITIES AND REQUIREMENTS.—
‘‘(1) STAFF ASSISTANCE.—A resource advisory committee
may submit to the Secretary concerned a request for periodic
staff assistance from Federal employees under the jurisdiction
of the Secretary.
‘‘(2) MEETINGS.—All meetings of a resource advisory committee shall be announced at least 1 week in advance in a
local newspaper of record and shall be open to the public.
‘‘(3) RECORDS.—A resource advisory committee shall maintain records of the meetings of the committee and make the
records available for public inspection.

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‘‘SEC. 206. USE OF PROJECT FUNDS.

16 USC 7126.

‘‘(a) AGREEMENT REGARDING SCHEDULE AND COST OF
PROJECT.—
‘‘(1) AGREEMENT BETWEEN PARTIES.—The Secretary concerned may carry out a project submitted by a resource advisory
committee under section 203(a) using project funds or other
funds described in section 203(a)(2), if, as soon as practicable
after the issuance of a decision document for the project and
the exhaustion of all administrative appeals and judicial review
of the project decision, the Secretary concerned and the resource
advisory committee enter into an agreement addressing, at
a minimum, the following:
‘‘(A) The schedule for completing the project.
‘‘(B) The total cost of the project, including the level
of agency overhead to be assessed against the project.
‘‘(C) For a multiyear project, the estimated cost of
the project for each of the fiscal years in which it will
be carried out.

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‘‘(D) The remedies for failure of the Secretary concerned
to comply with the terms of the agreement consistent with
current Federal law.
‘‘(2) LIMITED USE OF FEDERAL FUNDS.—The Secretary concerned may decide, at the sole discretion of the Secretary concerned, to cover the costs of a portion of an approved project
using Federal funds appropriated or otherwise available to
the Secretary for the same purposes as the project.
‘‘(b) TRANSFER OF PROJECT FUNDS.—
‘‘(1) INITIAL TRANSFER REQUIRED.—As soon as practicable
after the agreement is reached under subsection (a) with regard
to a project to be funded in whole or in part using project
funds, or other funds described in section 203(a)(2), the Secretary concerned shall transfer to the applicable unit of
National Forest System land or Bureau of Land Management
District an amount of project funds equal to—
‘‘(A) in the case of a project to be completed in a
single fiscal year, the total amount specified in the agreement to be paid using project funds, or other funds
described in section 203(a)(2); or
‘‘(B) in the case of a multiyear project, the amount
specified in the agreement to be paid using project funds,
or other funds described in section 203(a)(2) for the first
fiscal year.
‘‘(2) CONDITION ON PROJECT COMMENCEMENT.—The unit of
National Forest System land or Bureau of Land Management
District concerned, shall not commence a project until the
project funds, or other funds described in section 203(a)(2)
required to be transferred under paragraph (1) for the project,
have been made available by the Secretary concerned.
‘‘(3) SUBSEQUENT TRANSFERS FOR MULTIYEAR PROJECTS.—
‘‘(A) IN GENERAL.—For the second and subsequent fiscal
years of a multiyear project to be funded in whole or
in part using project funds, the unit of National Forest
System land or Bureau of Land Management District concerned shall use the amount of project funds required to
continue the project in that fiscal year according to the
agreement entered into under subsection (a).
‘‘(B) SUSPENSION OF WORK.—The Secretary concerned
shall suspend work on the project if the project funds
required by the agreement in the second and subsequent
fiscal years are not available.

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16 USC 7127.

‘‘SEC. 207. AVAILABILITY OF PROJECT FUNDS.

‘‘(a) SUBMISSION OF PROPOSED PROJECTS TO OBLIGATE FUNDS.—
By September 30, 2008 (or as soon thereafter as the Secretary
concerned determines is practicable), and each September 30 thereafter for each succeeding fiscal year through fiscal year 2011, a
resource advisory committee shall submit to the Secretary concerned
pursuant to section 203(a)(1) a sufficient number of project proposals
that, if approved, would result in the obligation of at least the
full amount of the project funds reserved by the participating county
in the preceding fiscal year.
‘‘(b) USE OR TRANSFER OF UNOBLIGATED FUNDS.—Subject to
section 208, if a resource advisory committee fails to comply with
subsection (a) for a fiscal year, any project funds reserved by the
participating county in the preceding fiscal year and remaining

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unobligated shall be available for use as part of the project submissions in the next fiscal year.
‘‘(c) EFFECT OF REJECTION OF PROJECTS.—Subject to section
208, any project funds reserved by a participating county in the
preceding fiscal year that are unobligated at the end of a fiscal
year because the Secretary concerned has rejected one or more
proposed projects shall be available for use as part of the project
submissions in the next fiscal year.
‘‘(d) EFFECT OF COURT ORDERS.—
‘‘(1) IN GENERAL.—If an approved project under this Act
is enjoined or prohibited by a Federal court, the Secretary
concerned shall return the unobligated project funds related
to the project to the participating county or counties that
reserved the funds.
‘‘(2) EXPENDITURE OF FUNDS.—The returned funds shall
be available for the county to expend in the same manner
as the funds reserved by the county under subparagraph (B)
or (C)(i) of section 102(d)(1).
‘‘SEC. 208. TERMINATION OF AUTHORITY.

16 USC 7128.

‘‘(a) IN GENERAL.—The authority to initiate projects under this
title shall terminate on September 30, 2011.
‘‘(b) DEPOSITS IN TREASURY.—Any project funds not obligated
by September 30, 2012, shall be deposited in the Treasury of the
United States.

‘‘TITLE III—COUNTY FUNDS
‘‘SEC. 301. DEFINITIONS.

16 USC 7141.

‘‘In this title:
‘‘(1) COUNTY FUNDS.—The term ‘county funds’ means all
funds an eligible county elects under section 102(d) to reserve
for expenditure in accordance with this title.
‘‘(2) PARTICIPATING COUNTY.—The term ‘participating
county’ means an eligible county that elects under section
102(d) to expend a portion of the Federal funds received under
section 102 in accordance with this title.

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‘‘SEC. 302. USE.

16 USC 7142.

‘‘(a) AUTHORIZED USES.—A participating county, including any
applicable agencies of the participating county, shall use county
funds, in accordance with this title, only—
‘‘(1) to carry out activities under the Firewise Communities
program to provide to homeowners in fire-sensitive ecosystems
education on, and assistance with implementing, techniques
in home siting, home construction, and home landscaping that
can increase the protection of people and property from
wildfires;
‘‘(2) to reimburse the participating county for search and
rescue and other emergency services, including firefighting,
that are—
‘‘(A) performed on Federal land after the date on which
the use was approved under subsection (b);
‘‘(B) paid for by the participating county; and
‘‘(3) to develop community wildfire protection plans in
coordination with the appropriate Secretary concerned.

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‘‘(b) PROPOSALS.—A participating county shall use county funds
for a use described in subsection (a) only after a 45-day public
comment period, at the beginning of which the participating county
shall—
‘‘(1) publish in any publications of local record a proposal
that describes the proposed use of the county funds; and
‘‘(2) submit the proposal to any resource advisory committee
established under section 205 for the participating county.

Publication.

16 USC 7143.

‘‘SEC. 303. CERTIFICATION.

Deadline.

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

16 USC 7144.

‘‘SEC. 304. TERMINATION OF AUTHORITY.

‘‘(a) IN GENERAL.—The authority to initiate projects under this
title terminates on September 30, 2011.
‘‘(b) AVAILABILITY.—Any county funds not obligated by September 30, 2012, shall be returned to the Treasury of the United
States.

‘‘TITLE IV—MISCELLANEOUS
PROVISIONS
16 USC 7151.

‘‘SEC. 401. REGULATIONS.

‘‘The Secretary of Agriculture and the Secretary of the Interior
shall issue regulations to carry out the purposes of this Act.
16 USC 7152.

‘‘SEC. 402. AUTHORIZATION OF APPROPRIATIONS.

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

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16 USC 7153.

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

‘‘(a) RELATION TO OTHER APPROPRIATIONS.—Funds made available under section 402 and funds made available to a Secretary
concerned under section 206 shall be in addition to any other
annual appropriations for the Forest Service and the Bureau of
Land Management.
‘‘(b) DEPOSIT OF REVENUES AND OTHER FUNDS.—All revenues
generated from projects pursuant to title II, including any interest
accrued from the revenues, shall be deposited in the Treasury
of the United States.’’.
(b) FOREST RECEIPT PAYMENTS TO ELIGIBLE STATES AND COUNTIES.—
(1) ACT OF MAY 23, 1908.—The sixth paragraph under the
heading ‘‘FOREST SERVICE’’ in the Act of May 23, 1908 (16
U.S.C. 500) is amended in the first sentence by striking
‘‘twenty-five percentum’’ and all that follows through ‘‘shall

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be paid’’ and inserting the following: ‘‘an amount equal to
the annual average of 25 percent of all amounts received for
the applicable fiscal year and each of the preceding 6 fiscal
years from each national forest shall be paid’’.
(2) WEEKS LAW.—Section 13 of the Act of March 1, 1911
(commonly known as the ‘‘Weeks Law’’) (16 U.S.C. 500) is
amended in the first sentence by striking ‘‘twenty-five
percentum’’ and all that follows through ‘‘shall be paid’’ and
inserting the following: ‘‘an amount equal to the annual average
of 25 percent of all amounts received for the applicable fiscal
year and each of the preceding 6 fiscal years from each national
forest shall be paid’’.
(c) PAYMENTS IN LIEU OF TAXES.—
(1) IN GENERAL.—Section 6906 of title 31, United States
Code, is amended to read as follows:
‘‘§ 6906. Funding
‘‘For each of fiscal years 2008 through 2012—
‘‘(1) each county or other eligible unit of local government
shall be entitled to payment under this chapter; and
‘‘(2) sums shall be made available to the Secretary of the
Interior for obligation or expenditure in accordance with this
chapter.’’.
(2) CONFORMING AMENDMENT.—The table of sections for
chapter 69 of title 31, United States Code, is amended by
striking the item relating to section 6906 and inserting the
following:
‘‘6906. Funding.’’.

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

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SEC. 602. TRANSFER TO ABANDONED MINE RECLAMATION FUND.

Subparagraph (C) of section 402(i)(1) of the Surface Mining
Control and Reclamation Act of 1977 (30 U.S.C. 1232(i)(1)) is
amended by striking ‘‘and $9,000,000 on October 1, 2009’’ and

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inserting ‘‘$9,000,000 on October 1, 2009, and $9,000,000 on October
1, 2010’’.

TITLE VII—DISASTER RELIEF
Subtitle A—Heartland and Hurricane Ike
Disaster Relief

Heartland
Disaster Tax
Relief Act
of 2008.
26 USC 1 note.

SEC. 701. SHORT TITLE.

This subtitle may be cited as the ‘‘Heartland Disaster Tax
Relief Act of 2008’’.
SEC. 702. TEMPORARY TAX RELIEF FOR AREAS DAMAGED BY 2008 MIDWESTERN SEVERE STORMS, TORNADOS, AND FLOODING.
Applicability.

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(a) IN GENERAL.—Subject to the modifications described in this
section, the following provisions of or relating to the Internal Revenue Code of 1986 shall apply to any Midwestern disaster area
in addition to the areas to which such provisions otherwise apply:
(1) GO ZONE BENEFITS.—
(A) Section 1400N (relating to tax benefits) other than
subsections (b), (d), (e), (i), (j), (m), and (o) thereof.
(B) Section 1400O (relating to education tax benefits).
(C) Section 1400P (relating to housing tax benefits).
(D) Section 1400Q (relating to special rules for use
of retirement funds).
(E) Section 1400R(a) (relating to employee retention
credit for employers).
(F) Section 1400S (relating to additional tax relief)
other than subsection (d) thereof.
(G) Section 1400T (relating to special rules for mortgage revenue bonds).
(2) OTHER BENEFITS INCLUDED IN KATRINA EMERGENCY TAX
RELIEF ACT OF 2005.—Sections 302, 303, 304, 401, and 405
of the Katrina Emergency Tax Relief Act of 2005.
(b) MIDWESTERN DISASTER AREA.—
(1) IN GENERAL.—For purposes of this section and for
applying the substitutions described in subsections (d) and
(e), the term ‘‘Midwestern disaster area’’ means an area—
(A) with respect to which a major disaster has been
declared by the President on or after May 20, 2008, and
before August 1, 2008, under section 401 of the Robert
T. Stafford Disaster Relief and Emergency Assistance Act
by reason of severe storms, tornados, or flooding occurring
in any of the States of Arkansas, Illinois, Indiana, Iowa,
Kansas, Michigan, Minnesota, Missouri, Nebraska, and
Wisconsin, and
(B) determined by the President to warrant individual
or individual and public assistance from the Federal
Government under such Act with respect to damages attributable to such severe storms, tornados, or flooding.
(2) CERTAIN BENEFITS AVAILABLE TO AREAS ELIGIBLE ONLY
FOR PUBLIC ASSISTANCE.—For purposes of applying this section
to benefits under the following provisions, paragraph (1) shall
be applied without regard to subparagraph (B):

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122 STAT. 3913

(A) Sections 1400Q, 1400S(b), and 1400S(d) of the
Internal Revenue Code of 1986.
(B) Sections 302, 401, and 405 of the Katrina Emergency Tax Relief Act of 2005.
(c) REFERENCES.—
(1) AREA.—Any reference in such provisions to the Hurricane Katrina disaster area or the Gulf Opportunity Zone shall
be treated as a reference to any Midwestern disaster area
and any reference to the Hurricane Katrina disaster area or
the Gulf Opportunity Zone within a State shall be treated
as a reference to all Midwestern disaster areas within the
State.
(2) ITEMS ATTRIBUTABLE TO DISASTER.—Any reference in
such provisions to any loss, damage, or other item attributable
to Hurricane Katrina shall be treated as a reference to any
loss, damage, or other item attributable to the severe storms,
tornados, or flooding giving rise to any Presidential declaration
described in subsection (b)(1)(A).
(3) APPLICABLE DISASTER DATE.—For purposes of applying
the substitutions described in subsections (d) and (e), the term
‘‘applicable disaster date’’ means, with respect to any Midwestern disaster area, the date on which the severe storms,
tornados, or flooding giving rise to the Presidential declaration
described in subsection (b)(1)(A) occurred.
(d) MODIFICATIONS TO 1986 CODE.—The following provisions
of the Internal Revenue Code of 1986 shall be applied with the
following modifications:
(1) TAX-EXEMPT BOND FINANCING.—Section 1400N(a)—
(A) by substituting ‘‘qualified Midwestern disaster area
bond’’ for ‘‘qualified Gulf Opportunity Zone Bond’’ each
place it appears, except that in determining whether a
bond is a qualified Midwestern disaster area bond—
(i) paragraph (2)(A)(i) shall be applied by only
treating costs as qualified project costs if—
(I) in the case of a project involving a private
business use (as defined in section 141(b)(6)),
either the person using the property suffered a
loss in a trade or business attributable to the
severe storms, tornados, or flooding giving rise
to any Presidential declaration described in subsection (b)(1)(A) or is a person designated for purposes of this section by the Governor of the State
in which the project is located as a person carrying
on a trade or business replacing a trade or business
with respect to which another person suffered such
a loss, and
(II) in the case of a project relating to public
utility property, the project involves repair or
reconstruction of public utility property damaged
by such severe storms, tornados, or flooding, and
(ii) paragraph (2)(A)(ii) shall be applied by treating
an issue as a qualified mortgage issue only if 95 percent
or more of the net proceeds (as defined in section
150(a)(3)) of the issue are to be used to provide
financing for mortgagors who suffered damages to their
principal residences attributable to such severe storms,
tornados, or flooding.

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122 STAT. 3914

PUBLIC LAW 110–343—OCT. 3, 2008
(B) by substituting ‘‘any State in which a Midwestern
disaster area is located’’ for ‘‘the State of Alabama, Louisiana, or Mississippi’’ in paragraph (2)(B),
(C) by substituting ‘‘designated for purposes of this
section (on the basis of providing assistance to areas in
the order in which such assistance is most needed)’’ for
‘‘designated for purposes of this section’’ in paragraph
(2)(C),
(D) by substituting ‘‘January 1, 2013’’ for ‘‘January
1, 2011’’ in paragraph (2)(D),
(E) in paragraph (3)(A)—
(i) by substituting ‘‘$1,000’’ for ‘‘$2,500’’, and
(ii) by substituting ‘‘before the earliest applicable
disaster date for Midwestern disaster areas within the
State’’ for ‘‘before August 28, 2005’’,
(F) by substituting ‘‘qualified Midwestern disaster area
repair or construction’’ for ‘‘qualified GO Zone repair or
construction’’ each place it appears,
(G) by substituting ‘‘after the date of the enactment
of the Heartland Disaster Tax Relief Act of 2008 and before
January 1, 2013’’ for ‘‘after the date of the enactment
of this paragraph and before January 1, 2011’’ in paragraph
(7)(C), and
(H) by disregarding paragraph (8) thereof.
(2) LOW-INCOME HOUSING CREDIT.—Section 1400N(c)—
(A) only with respect to calendar years 2008, 2009,
and 2010,
(B) by substituting ‘‘Disaster Recovery Assistance
housing amount’’ for ‘‘Gulf Opportunity housing amount’’
each place it appears,
(C) in paragraph (1)(B)—
(i) by substituting ‘‘$8.00’’ for ‘‘$18.00’’, and
(ii) by substituting ‘‘before the earliest applicable
disaster date for Midwestern disaster areas within the
State’’ for ‘‘before August 28, 2005’’, and
(D) determined without regard to paragraphs (2), (3),
(4), (5), and (6) thereof.
(3) EXPENSING FOR CERTAIN DEMOLITION AND CLEAN-UP
COSTS.—Section 1400N(f)—
(A) by substituting ‘‘qualified Disaster Recovery Assistance clean-up cost’’ for ‘‘qualified Gulf Opportunity Zone
clean-up cost’’ each place it appears,
(B) by substituting ‘‘beginning on the applicable disaster date and ending on December 31, 2010’’ for ‘‘beginning
on August 28, 2005, and ending on December 31, 2007’’
in paragraph (2), and
(C) by treating costs as qualified Disaster Recovery
Assistance clean-up costs only if the removal of debris
or demolition of any structure was necessary due to damage
attributable to the severe storms, tornados, or flooding
giving rise to any Presidential declaration described in
subsection (b)(1)(A).
(4) EXTENSION OF EXPENSING FOR ENVIRONMENTAL REMEDIATION COSTS.—Section 1400N(g)—
(A) by substituting ‘‘the applicable disaster date’’ for
‘‘August 28, 2005’’ each place it appears,

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3915

(B) by substituting ‘‘January 1, 2011’’ for ‘‘January
1, 2008’’ in paragraph (1),
(C) by substituting ‘‘December 31, 2010’’ for ‘‘December
31, 2007’’ in paragraph (1), and
(D) by treating a site as a qualified contaminated site
only if the release (or threat of release) or disposal of
a hazardous substance at the site was attributable to the
severe storms, tornados, or flooding giving rise to any Presidential declaration described in subsection (b)(1)(A).
(5) INCREASE IN REHABILITATION CREDIT.—Section
1400N(h), as amended by this Act—
(A) by substituting ‘‘the applicable disaster date’’ for
‘‘August 28, 2005’’,
(B) by substituting ‘‘December 31, 2011’’ for ‘‘December
31, 2009’’ in paragraph (1), and
(C) by only applying such subsection to qualified
rehabilitation expenditures with respect to any building
or structure which was damaged or destroyed as a result
of the severe storms, tornados, or flooding giving rise to
any Presidential declaration described in subsection
(b)(1)(A).
(6) TREATMENT OF NET OPERATING LOSSES ATTRIBUTABLE
TO DISASTER LOSSES.—Section 1400N(k)—
(A) by substituting ‘‘qualified Disaster Recovery Assistance loss’’ for ‘‘qualified Gulf Opportunity Zone loss’’ each
place it appears,
(B) by substituting ‘‘after the day before the applicable
disaster date, and before January 1, 2011’’ for ‘‘after August
27, 2005, and before January 1, 2008’’ each place it appears,
(C) by substituting ‘‘the applicable disaster date’’ for
‘‘August 28, 2005’’ in paragraph (2)(B)(ii)(I),
(D) by substituting ‘‘qualified Disaster Recovery Assistance property’’ for ‘‘qualified Gulf Opportunity Zone property’’ in paragraph (2)(B)(iv), and
(E) by substituting ‘‘qualified Disaster Recovery Assistance casualty loss’’ for ‘‘qualified Gulf Opportunity Zone
casualty loss’’ each place it appears.
(7) CREDIT TO HOLDERS OF TAX CREDIT BONDS.—Section
1400N(l)—
(A) by substituting ‘‘Midwestern tax credit bond’’ for
‘‘Gulf tax credit bond’’ each place it appears,
(B) by substituting ‘‘any State in which a Midwestern
disaster area is located or any instrumentality of the State’’
for ‘‘the State of Alabama, Louisiana, or Mississippi’’ in
paragraph (4)(A)(i),
(C) by substituting ‘‘after December 31, 2008 and before
January 1, 2010’’ for ‘‘after December 31, 2005, and before
January 1, 2007’’,
(D) by substituting ‘‘shall not exceed $100,000,000 for
any State with an aggregate population located in all Midwestern disaster areas within the State of at least
2,000,000, $50,000,000 for any State with an aggregate
population located in all Midwestern disaster areas within
the State of at least 1,000,000 but less than 2,000,000,
and zero for any other State. The population of a State
within any area shall be determined on the basis of the
most recent census estimate of resident population released

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PUBLIC LAW 110–343—OCT. 3, 2008
by the Bureau of Census before the earliest applicable
disaster date for Midwestern disaster areas within the
State.’’ for ‘‘shall not exceed’’ and all that follows in paragraph (4)(C), and
(E) by substituting ‘‘the earliest applicable disaster
date for Midwestern disaster areas within the State’’ for
‘‘August 28, 2005’’ in paragraph (5)(A).
(8) EDUCATION TAX BENEFITS.—Section 1400O, by substituting ‘‘2008 or 2009’’ for ‘‘2005 or 2006’’.
(9) HOUSING TAX BENEFITS.—Section 1400P, by substituting
‘‘the applicable disaster date’’ for ‘‘August 28, 2005’’ in subsection (c)(1).
(10) SPECIAL RULES FOR USE OF RETIREMENT FUNDS.—Section 1400Q—
(A) by substituting ‘‘qualified Disaster Recovery Assistance distribution’’ for ‘‘qualified hurricane distribution’’
each place it appears,
(B) by substituting ‘‘on or after the applicable disaster
date and before January 1, 2010’’ for ‘‘on or after August
25, 2005, and before January 1, 2007’’ in subsection
(a)(4)(A)(i),
(C) by substituting ‘‘the applicable disaster date’’ for
‘‘August 28, 2005’’ in subsections (a)(4)(A)(i) and (c)(3)(B),
(D) by disregarding clauses (ii) and (iii) of subsection
(a)(4)(A) thereof,
(E) by substituting ‘‘qualified storm damage distribution’’ for ‘‘qualified Katrina distribution’’ each place it
appears,
(F) by substituting ‘‘after the date which is 6 months
before the applicable disaster date and before the date
which is the day after the applicable disaster date’’ for
‘‘after February 28, 2005, and before August 29, 2005’’
in subsection (b)(2)(B)(ii),
(G) by substituting ‘‘the Midwestern disaster area, but
not so purchased or constructed on account of severe
storms, tornados, or flooding giving rise to the designation
of the area as a disaster area’’ for ‘‘the Hurricane Katrina
disaster area, but not so purchased or constructed on
account of Hurricane Katrina’’ in subsection (b)(2)(B)(iii),
(H) by substituting ‘‘beginning on the applicable disaster date and ending on the date which is 5 months
after the date of the enactment of the Heartland Disaster
Tax Relief Act of 2008’’ for ‘‘beginning on August 25, 2005,
and ending on February 28, 2006’’ in subsection (b)(3)(A),
(I) by substituting ‘‘qualified storm damage individual’’
for ‘‘qualified Hurricane Katrina individual’’ each place it
appears,
(J) by substituting ‘‘December 31, 2009’’ for ‘‘December
31, 2006’’ in subsection (c)(2)(A),
(K) by disregarding subparagraphs (C) and (D) of subsection (c)(3) thereof,
(L) by substituting ‘‘beginning on the date of the enactment of the Heartland Disaster Tax Relief Act of 2008
and ending on December 31, 2009’’ for ‘‘beginning on September 24, 2005, and ending on December 31, 2006’’ in
subsection (c)(4)(A)(i),

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122 STAT. 3917

(M) by substituting ‘‘the applicable disaster date’’ for
‘‘August 25, 2005’’ in subsection (c)(4)(A)(ii), and
(N) by substituting ‘‘January 1, 2010’’ for ‘‘January
1, 2007’’ in subsection (d)(2)(A)(ii).
(11) EMPLOYEE RETENTION CREDIT FOR EMPLOYERS
AFFECTED BY SEVERE STORMS, TORNADOS, AND FLOODING.—Section 1400R(a)—
(A) by substituting ‘‘the applicable disaster date’’ for
‘‘August 28, 2005’’ each place it appears,
(B) by substituting ‘‘January 1, 2009’’ for ‘‘January
1, 2006’’ both places it appears, and
(C) only with respect to eligible employers who
employed an average of not more than 200 employees on
business days during the taxable year before the applicable
disaster date.
(12) TEMPORARY SUSPENSION OF LIMITATIONS ON CHARITABLE CONTRIBUTIONS.—Section 1400S(a), by substituting the
following paragraph for paragraph (4) thereof:
‘‘(4) QUALIFIED CONTRIBUTIONS.—
‘‘(A) IN GENERAL.—For purposes of this subsection, the
term ‘qualified contribution’ means any charitable contribution (as defined in section 170(c)) if—
‘‘(i) such contribution—
‘‘(I) is paid during the period beginning on
the earliest applicable disaster date for all States
and ending on December 31, 2008, in cash to an
organization described in section 170(b)(1)(A), and
‘‘(II) is made for relief efforts in 1 or more
Midwestern disaster areas,
‘‘(ii) the taxpayer obtains from such organization
contemporaneous written acknowledgment (within the
meaning of section 170(f)(8)) that such contribution
was used (or is to be used) for relief efforts in 1
or more Midwestern disaster areas, and
‘‘(iii) the taxpayer has elected the application of
this subsection with respect to such contribution.
‘‘(B) EXCEPTION.—Such term shall not include a contribution by a donor if the contribution is—
‘‘(i) to an organization described in section
509(a)(3), or
‘‘(ii) for establishment of a new, or maintenance
of an existing, donor advised fund (as defined in section
4966(d)(2)).
‘‘(C) APPLICATION OF ELECTION TO PARTNERSHIPS AND
S CORPORATIONS.—In the case of a partnership or S corporation, the election under subparagraph (A)(iii) shall be made
separately by each partner or shareholder.’’.
(13) SUSPENSION OF CERTAIN LIMITATIONS ON PERSONAL
CASUALTY LOSSES.—Section 1400S(b)(1), by substituting ‘‘the
applicable disaster date’’ for ‘‘August 25, 2005’’.
(14) SPECIAL RULE FOR DETERMINING EARNED INCOME.—
Section 1400S(d)—
(A) by treating an individual as a qualified individual
if such individual’s principal place of abode on the
applicable disaster date was located in a Midwestern disaster area,

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(B) by treating the applicable disaster date with respect
to any such individual as the applicable date for purposes
of such subsection, and
(C) by treating an area as described in paragraph
(2)(B)(ii) thereof if the area is a Midwestern disaster area
only by reason of subsection (b)(2) of this section (relating
to areas eligible only for public assistance).
(15) ADJUSTMENTS REGARDING TAXPAYER AND DEPENDENCY
STATUS.—Section 1400S(e), by substituting ‘‘2008 or 2009’’ for
‘‘2005 or 2006’’.
(e) MODIFICATIONS TO KATRINA EMERGENCY TAX RELIEF ACT
OF 2005.—The following provisions of the Katrina Emergency Tax
Relief Act of 2005 shall be applied with the following modifications:
(1) ADDITIONAL EXEMPTION FOR HOUSING DISPLACED INDIVIDUAL.—Section 302—
(A) by substituting ‘‘2008 or 2009’’ for ‘‘2005 or 2006’’
in subsection (a) thereof,
(B) by substituting ‘‘Midwestern displaced individual’’
for ‘‘Hurricane Katrina displaced individual’’ each place
it appears, and
(C) by treating an area as a core disaster area for
purposes of applying subsection (c) thereof if the area is
a Midwestern disaster area without regard to subsection
(b)(2) of this section (relating to areas eligible only for
public assistance).
(2) INCREASE IN STANDARD MILEAGE RATE.—Section 303,
by substituting ‘‘beginning on the applicable disaster date and
ending on December 31, 2008’’ for ‘‘beginning on August 25,
2005, and ending on December 31, 2006’’.
(3) MILEAGE REIMBURSEMENTS FOR CHARITABLE VOLUNTEERS.—Section 304—
(A) by substituting ‘‘beginning on the applicable disaster date and ending on December 31, 2008’’ for ‘‘beginning
on August 25, 2005, and ending on December 31, 2006’’
in subsection (a), and
(B) by substituting ‘‘the applicable disaster date’’ for
‘‘August 25, 2005’’ in subsection (a).
(4) EXCLUSION OF CERTAIN CANCELLATION OF INDEBTEDNESS
INCOME.—Section 401—
(A) by treating an individual whose principal place
of abode on the applicable disaster date was in a Midwestern disaster area (determined without regard to subsection (b)(2) of this section) as an individual described
in subsection (b)(1) thereof, and by treating an individual
whose principal place of abode on the applicable disaster
date was in a Midwestern disaster area solely by reason
of subsection (b)(2) of this section as an individual described
in subsection (b)(2) thereof,
(B) by substituting ‘‘the applicable disaster date’’ for
‘‘August 28, 2005’’ both places it appears, and
(C) by substituting ‘‘January 1, 2010’’ for ‘‘January
1, 2007’’ in subsection (e).
(5) EXTENSION OF REPLACEMENT PERIOD FOR NONRECOGNITION OF GAIN.—Section 405, by substituting ‘‘on or after the
applicable disaster date’’ for ‘‘on or after August 25, 2005’’.

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PUBLIC LAW 110–343—OCT. 3, 2008
SEC.

703.

REPORTING REQUIREMENTS
RELIEF CONTRIBUTIONS.

RELATING

TO

122 STAT. 3919
DISASTER

(a) IN GENERAL.—Section 6033(b) (relating to returns of certain
organizations described in section 501(c)(3)) is amended by striking
‘‘and’’ at the end of paragraph (13), by redesignating paragraph
(14) as paragraph (15), and by adding after paragraph (13) the
following new paragraph:
‘‘(14) such information as the Secretary may require with
respect to disaster relief activities, including the amount and
use of qualified contributions to which section 1400S(a) applies,
and’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to returns the due date for which (determined without
regard to any extension) occurs after December 31, 2008.

26 USC 6033.

26 USC 6033
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SEC. 704. TEMPORARY TAX-EXEMPT BOND FINANCING AND LOWINCOME HOUSING TAX RELIEF FOR AREAS DAMAGED BY
HURRICANE IKE.

(a) TAX-EXEMPT BOND FINANCING.—Section 1400N(a) of the
Internal Revenue Code of 1986 shall apply to any Hurricane Ike
disaster area in addition to any other area referenced in such
section, but with the following modifications:
(1) By substituting ‘‘qualified Hurricane Ike disaster area
bond’’ for ‘‘qualified Gulf Opportunity Zone Bond’’ each place
it appears, except that in determining whether a bond is a
qualified Hurricane Ike disaster area bond—
(A) paragraph (2)(A)(i) shall be applied by only treating
costs as qualified project costs if—
(i) in the case of a project involving a private
business use (as defined in section 141(b)(6)), either
the person using the property suffered a loss in a
trade or business attributable to Hurricane Ike or is
a person designated for purposes of this section by
the Governor of the State in which the project is located
as a person carrying on a trade or business replacing
a trade or business with respect to which another
person suffered such a loss, and
(ii) in the case of a project relating to public utility
property, the project involves repair or reconstruction
of public utility property damaged by Hurricane Ike,
and
(B) paragraph (2)(A)(ii) shall be applied by treating
an issue as a qualified mortgage issue only if 95 percent
or more of the net proceeds (as defined in section 150(a)(3))
of the issue are to be used to provide financing for mortgagors who suffered damages to their principal residences
attributable to Hurricane Ike.
(2) By substituting ‘‘any State in which any Hurricane
Ike disaster area is located’’ for ‘‘the State of Alabama, Louisiana, or Mississippi’’ in paragraph (2)(B).
(3) By substituting ‘‘designated for purposes of this section
(on the basis of providing assistance to areas in the order
in which such assistance is most needed)’’ for ‘‘designated for
purposes of this section’’ in paragraph (2)(C).
(4) By substituting ‘‘January 1, 2013’’ for ‘‘January 1, 2011’’
in paragraph (2)(D).

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122 STAT. 3920

Texas.
Louisiana.

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(5) By substituting the following for subparagraph (A) of
paragraph (3):
‘‘(A) AGGREGATE AMOUNT DESIGNATED.—The maximum
aggregate face amount of bonds which may be designated
under this subsection with respect to any State shall not
exceed the product of $2,000 multiplied by the portion
of the State population which is in—
‘‘(i) in the case of Texas, the counties of Brazoria,
Chambers, Galveston, Jefferson, and Orange, and
‘‘(ii) in the case of Louisiana, the parishes of
Calcasieu and Cameron,
(as determined on the basis of the most recent census
estimate of resident population released by the Bureau
of Census before September 13, 2008).’’.
(6) By substituting ‘‘qualified Hurricane Ike disaster area
repair or construction’’ for ‘‘qualified GO Zone repair or
construction’’ each place it appears.
(7) By substituting ‘‘after the date of the enactment of
the Heartland Disaster Tax Relief Act of 2008 and before
January 1, 2013’’ for ‘‘after the date of the enactment of this
paragraph and before January 1, 2011’’ in paragraph (7)(C).
(8) By disregarding paragraph (8) thereof.
(9) By substituting ‘‘any Hurricane Ike disaster area’’ for
‘‘the Gulf Opportunity Zone’’ each place it appears.
(b) LOW-INCOME HOUSING CREDIT.—Section 1400N(c) of the
Internal Revenue Code of 1986 shall apply to any Hurricane Ike
disaster area in addition to any other area referenced in such
section, but with the following modifications:
(1) Only with respect to calendar years 2008, 2009, and
2010.
(2) By substituting ‘‘any Hurricane Ike disaster area’’ for
‘‘the Gulf Opportunity Zone’’ each place it appears.
(3) By substituting ‘‘Hurricane Ike Recovery Assistance
housing amount’’ for ‘‘Gulf Opportunity housing amount’’ each
place it appears.
(4) By substituting the following for subparagraph (B) of
paragraph (1):
‘‘(B) HURRICANE IKE HOUSING AMOUNT.—For purposes
of subparagraph (A), the term ‘Hurricane Ike housing
amount’ means, for any calendar year, the amount equal
to the product of $16.00 multiplied by the portion of the
State population which is in—
‘‘(i) in the case of Texas, the counties of Brazoria,
Chambers, Galveston, Jefferson, and Orange, and
‘‘(ii) in the case of Louisiana, the parishes of
Calcasieu and Cameron,
(as determined on the basis of the most recent census
estimate of resident population released by the Bureau
of Census before September 13, 2008).’’.
(5) Determined without regard to paragraphs (2), (3), (4),
(5), and (6) thereof.
(c) HURRICANE IKE DISASTER AREA.—For purposes of this section and for applying the substitutions described in subsections
(a) and (b), the term ‘‘Hurricane Ike disaster area’’ means an
area in the State of Texas or Louisiana—
(1) with respect to which a major disaster has been declared
by the President on September 13, 2008, under section 401

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of the Robert T. Stafford Disaster Relief and Emergency Assistance Act by reason of Hurricane Ike, and
(2) determined by the President to warrant individual or
individual and public assistance from the Federal Government
under such Act with respect to damages attributable to Hurricane Ike.

Subtitle B—National Disaster Relief

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SEC. 706. LOSSES ATTRIBUTABLE TO FEDERALLY DECLARED DISASTERS.

(a) WAIVER OF ADJUSTED GROSS INCOME LIMITATION.—
(1) IN GENERAL.—Subsection (h) of section 165 is amended
by redesignating paragraphs (3) and (4) as paragraphs (4) and
(5), respectively, and by inserting after paragraph (2) the following new paragraph:
‘‘(3) SPECIAL RULE FOR LOSSES IN FEDERALLY DECLARED
DISASTERS.—
‘‘(A) IN GENERAL.—If an individual has a net disaster
loss for any taxable year, the amount determined under
paragraph (2)(A)(ii) shall be the sum of—
‘‘(i) such net disaster loss, and
‘‘(ii) so much of the excess referred to in the matter
preceding clause (i) of paragraph (2)(A) (reduced by
the amount in clause (i) of this subparagraph) as
exceeds 10 percent of the adjusted gross income of
the individual.
‘‘(B) NET DISASTER LOSS.—For purposes of subparagraph (A), the term ‘net disaster loss’ means the excess
of—
‘‘(i) the personal casualty losses—
‘‘(I) attributable to a federally declared disaster occurring before January 1, 2010, and
‘‘(II) occurring in a disaster area, over
‘‘(ii) personal casualty gains.
‘‘(C) FEDERALLY DECLARED DISASTER.—For purposes of
this paragraph—
‘‘(i) FEDERALLY DECLARED DISASTER.—The term
‘federally declared disaster’ means any disaster subsequently determined by the President of the United
States to warrant assistance by the Federal Government under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act.
‘‘(ii) DISASTER AREA.—The term ‘disaster area’
means the area so determined to warrant such assistance.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 165(h)(4)(B) (as so redesignated) is
amended by striking ‘‘paragraph (2)’’ and inserting ‘‘paragraphs (2) and (3)’’.
(B) Section 165(i)(1) is amended by striking ‘‘loss’’ and
all that follows through ‘‘Act’’ and inserting ‘‘loss occurring
in a disaster area (as defined by clause (ii) of subsection
(h)(3)(C)) and attributable to a federally declared disaster
(as defined by clause (i) of such subsection)’’.

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(C) Section 165(i)(4) is amended by striking ‘‘Presidentially declared disaster (as defined by section
1033(h)(3))’’ and inserting ‘‘federally declared disaster (as
defined by subsection (h)(3)(C)(i)’’.
(D)(i) So much of subsection (h) of section 1033 as
precedes subparagraph (A) of paragraph (1) thereof is
amended to read as follows:
‘‘(h) SPECIAL RULES FOR PROPERTY DAMAGED BY FEDERALLY
DECLARED DISASTERS.—
‘‘(1) PRINCIPAL RESIDENCES.—If the taxpayer’s principal
residence or any of its contents is located in a disaster area
and is compulsorily or involuntarily converted as a result of
a federally declared disaster—’’.
(ii) Paragraph (2) of section 1033(h) is amended by
striking ‘‘investment’’ and all that follows through ‘‘disaster’’ and inserting ‘‘investment located in a disaster area
and compulsorily or involuntarily converted as a result
of a federally declared disaster’’.
(iii) Paragraph (3) of section 1033(h) is amended to
read as follows:
‘‘(3) FEDERALLY DECLARED DISASTER; DISASTER AREA.—The
terms ‘‘federally declared disaster’’ and ‘‘disaster area’’ shall
have the respective meaning given such terms by section
165(h)(3)(C).’’.
(iv) Section 139(c)(2) is amended to read as follows:
‘‘(2) federally declared disaster (as defined by section
165(h)(3)(C)(i)),’’.
(v) Subclause (II) of section 172(b)(1)(F)(ii) is amended
by striking ‘‘Presidentially declared disasters (as defined
in section 1033(h)(3))’’ and inserting ‘‘federally declared
disasters (as defined by subsection (h)(3)(C)(i))’’.
(vi) Subclause (III) of section 172(b)(1)(F)(ii) is amended
by striking ‘‘Presidentially declared disasters’’ and inserting
‘‘federally declared disasters’’.
(vii) Subsection (a) of section 7508A is amended by
striking ‘‘Presidentially declared disaster (as defined in
section 1033(h)(3))’’ and inserting ‘‘federally declared disaster (as defined by section 165(h)(3)(C)(i))’’.
(b) INCREASE IN STANDARD DEDUCTION BY DISASTER CASUALTY
LOSS.—
(1) IN GENERAL.—Paragraph (1) of section 63(c), as
amended by the Housing Assistance Tax Act of 2008, is
amended by striking ‘‘and’’ at the end of subparagraph (B),
by striking the period at the end of subparagraph (C) and
inserting ‘‘, and’’, and by adding at the end the following new
subparagraph:
‘‘(D) the disaster loss deduction.’’.
(2) DISASTER LOSS DEDUCTION.—Subsection (c) of section
63, as amended by the Housing Assistance Tax Act of 2008,
is amended by adding at the end the following new paragraph:
‘‘(8) DISASTER LOSS DEDUCTION.—For the purposes of paragraph (1), the term ‘disaster loss deduction’ means the net
disaster loss (as defined in section 165(h)(3)(B)).’’.
(3) ALLOWANCE IN COMPUTING ALTERNATIVE MINIMUM TAXABLE INCOME.—Subparagraph (E) of section 56(b)(1) is amended
by adding at the end the following new sentence: ‘‘The preceding

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3923

sentence shall not apply to so much of the standard deduction
as is determined under section 63(c)(1)(D).’’.
(c) INCREASE IN LIMITATION ON INDIVIDUAL LOSS PER CASUALTY.—Paragraph (1) of section 165(h) is amended by striking
‘‘$100’’ and inserting ‘‘$500 ($100 for taxable years beginning after
December 31, 2009)’’.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided by paragraph (2),
the amendments made by this section shall apply to disasters
declared in taxable years beginning after December 31, 2007.
(2) INCREASE IN LIMITATION ON INDIVIDUAL LOSS PER CASUALTY.—The amendment made by subsection (c) shall apply
to taxable years beginning after December 31, 2008.

26 USC 165.

26 USC 56 note.

SEC. 707. EXPENSING OF QUALIFIED DISASTER EXPENSES.

(a) IN GENERAL.—Part VI of subchapter B of chapter 1 is
amended by inserting after section 198 the following new section:

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‘‘SEC. 198A. EXPENSING OF QUALIFIED DISASTER EXPENSES.

‘‘(a) IN GENERAL.—A taxpayer may elect to treat any qualified
disaster expenses which are paid or incurred by the taxpayer as
an expense which is not chargeable to capital account. Any expense
which is so treated shall be allowed as a deduction for the taxable
year in which it is paid or incurred.
‘‘(b) QUALIFIED DISASTER EXPENSE.—For purposes of this section, the term ‘qualified disaster expense’ means any expenditure—
‘‘(1) which is paid or incurred in connection with a trade
or business or with business-related property,
‘‘(2) which is—
‘‘(A) for the abatement or control of hazardous substances that were released on account of a federally
declared disaster occurring before January 1, 2010,
‘‘(B) for the removal of debris from, or the demolition
of structures on, real property which is business-related
property damaged or destroyed as a result of a federally
declared disaster occurring before such date, or
‘‘(C) for the repair of business-related property damaged as a result of a federally declared disaster occurring
before such date, and
‘‘(3) which is otherwise chargeable to capital account.
‘‘(c) OTHER DEFINITIONS.—For purposes of this section—
‘‘(1) BUSINESS-RELATED PROPERTY.—The term ‘businessrelated property’ means property—
‘‘(A) held by the taxpayer for use in a trade or business
or for the production of income, or
‘‘(B) described in section 1221(a)(1) in the hands of
the taxpayer.
‘‘(2) FEDERALLY DECLARED DISASTER.—The term ‘federally
declared disaster’ has the meaning given such term by section
165(h)(3)(C)(i).
‘‘(d) DEDUCTION RECAPTURED AS ORDINARY INCOME ON SALE,
ETC.—Solely for purposes of section 1245, in the case of property
to which a qualified disaster expense would have been capitalized
but for this section—
‘‘(1) the deduction allowed by this section for such expense
shall be treated as a deduction for depreciation, and

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122 STAT. 3924

PUBLIC LAW 110–343—OCT. 3, 2008

‘‘(2) such property (if not otherwise section 1245 property)
shall be treated as section 1245 property solely for purposes
of applying section 1245 to such deduction.
‘‘(e) COORDINATION WITH OTHER PROVISIONS.—Sections 198,
280B, and 468 shall not apply to amounts which are treated as
expenses under this section.
‘‘(f) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes
of this section.’’.
(b) CLERICAL AMENDMENT.—The table of sections for part VI
of subchapter B of chapter 1 is amended by inserting after the
item relating to section 198 the following new item:
‘‘Sec. 198A. Expensing of Qualified Disaster Expenses.’’.
26 USC 198A
note.

(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to amounts paid or incurred after December 31, 2007
in connection with disaster declared after such date.
SEC. 708. NET OPERATING LOSSES ATTRIBUTABLE TO FEDERALLY
DECLARED DISASTERS.

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26 USC 172.

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(a) IN GENERAL.—Paragraph (1) of section 172(b) is amended
by adding at the end the following new subparagraph:
‘‘(J) CERTAIN LOSSES ATTRIBUTABLE FEDERALLY
DECLARED DISASTERS.—In the case of a taxpayer who has
a qualified disaster loss (as defined in subsection (j)), such
loss shall be a net operating loss carryback to each of
the 5 taxable years preceding the taxable year of such
loss.’’.
(b) QUALIFIED DISASTER LOSS.—Section 172 is amended by
redesignating subsections (j) and (k) as subsections (k) and (l),
respectively, and by inserting after subsection (i) the following
new subsection:
‘‘(j) RULES RELATING TO QUALIFIED DISASTER LOSSES.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified disaster loss’ means
the lesser of—
‘‘(A) the sum of—
‘‘(i) the losses allowable under section 165 for the
taxable year—
‘‘(I) attributable to a federally declared disaster (as defined in section 165(h)(3)(C)(i)) occurring before January 1, 2010, and
‘‘(II) occurring in a disaster area (as defined
in section 165(h)(3)(C)(ii)), and
‘‘(ii) the deduction for the taxable year for qualified
disaster expenses which is allowable under section
198A(a) or which would be so allowable if not otherwise
treated as an expense, or
‘‘(B) the net operating loss for such taxable year.
‘‘(2) COORDINATION WITH SUBSECTION (b)(2).—For purposes
of applying subsection (b)(2), a qualified disaster loss for any
taxable year shall be treated in a manner similar to the manner
in which a specified liability loss is treated.
‘‘(3) ELECTION.—Any taxpayer entitled to a 5-year
carryback under subsection (b)(1)(J) from any loss year may
elect to have the carryback period with respect to such loss
year determined without regard to subsection (b)(1)(J). Such

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3925

election shall be made in such manner as may be prescribed
by the Secretary and shall be made by the due date (including
extensions of time) for filing the taxpayer’s return for the
taxable year of the net operating loss. Such election, once
made for any taxable year, shall be irrevocable for such taxable
year.
‘‘(4) EXCLUSION.—The term ‘qualified disaster loss’ shall
not include any loss with respect to any property described
in section 1400N(p)(3).’’.
(c) LOSS DEDUCTION ALLOWED IN COMPUTING ALTERNATIVE
MINIMUM TAXABLE INCOME.—Subsection (d) of section 56 is
amended by adding at the end the following new paragraph:
‘‘(3) NET OPERATING LOSS ATTRIBUTABLE TO FEDERALLY
DECLARED DISASTERS.—In the case of a taxpayer which has
a qualified disaster loss (as defined by section 172(b)(1)(J))
for the taxable year, paragraph (1) shall be applied by
increasing the amount determined under subparagraph (A)(ii)(I)
thereof by the sum of the carrybacks and carryovers of such
loss.’’.
(d) CONFORMING AMENDMENTS.—
(1) Clause (ii) of section 172(b)(1)(F) is amended by
inserting ‘‘or qualified disaster loss (as defined in subsection
(j))’’ before the period at the end of the last sentence.
(2) Paragraph (1) of section 172(i) is amended by adding
at the end the following new flush sentence:
‘‘Such term shall not include any qualified disaster loss (as
defined in subsection (j)).’’.
(e) EFFECTIVE DATE.—The amendments made by this section
shall apply to losses arising in taxable years beginning after
December 31, 2007, in connection with disasters declared after
such date.

26 USC 56.

Applicability.

26 USC 56 note.

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SEC. 709. WAIVER OF CERTAIN MORTGAGE REVENUE BOND REQUIREMENTS FOLLOWING FEDERALLY DECLARED DISASTERS.

(a) IN GENERAL.—Subsection (k) of section 143 is amended
by adding at the end the following new paragraph:
‘‘(12) SPECIAL RULES FOR RESIDENCES DESTROYED IN FEDERALLY DECLARED DISASTERS.—
‘‘(A) PRINCIPAL RESIDENCE DESTROYED.—At the election
of the taxpayer, if the principal residence (within the
meaning of section 121) of such taxpayer is—
‘‘(i) rendered unsafe for use as a residence by reason of a federally declared disaster occurring before
January 1, 2010, or
‘‘(ii) demolished or relocated by reason of an order
of the government of a State or political subdivision
thereof on account of a federally declared disaster
occurring before such date,
then, for the 2-year period beginning on the date of the
disaster declaration, subsection (d)(1) shall not apply with
respect to such taxpayer and subsection (e) shall be applied
by substituting ‘110’ for ‘90’ in paragraph (1) thereof.
‘‘(B) PRINCIPAL RESIDENCE DAMAGED.—
‘‘(i) IN GENERAL.—At the election of the taxpayer,
if the principal residence (within the meaning of section
121) of such taxpayer was damaged as the result of
a federally declared disaster occurring before January

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122 STAT. 3926

26 USC 143 note.

PUBLIC LAW 110–343—OCT. 3, 2008

1, 2010, any owner-financing provided in connection
with the repair or reconstruction of such residence
shall be treated as a qualified rehabilitation loan.
‘‘(ii) LIMITATION.—The aggregate owner-financing
to which clause (i) applies shall not exceed the lesser
of—
‘‘(I) the cost of such repair or reconstruction,
or
‘‘(II) $150,000.
‘‘(C) FEDERALLY DECLARED DISASTER.—For purposes of
this paragraph, the term ‘federally declared disaster’ has
the meaning given such term by section 165(h)(3)(C)(i).
‘‘(D) ELECTION; DENIAL OF DOUBLE BENEFIT.—
‘‘(i) ELECTION.—An election under this paragraph
may not be revoked except with the consent of the
Secretary.
‘‘(ii) DENIAL OF DOUBLE BENEFIT.—If a taxpayer
elects the application of this paragraph, paragraph
(11) shall not apply with respect to the purchase or
financing of any residence by such taxpayer.’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to disasters occurring after December 31, 2007.
SEC. 710. SPECIAL DEPRECIATION ALLOWANCE FOR QUALIFIED DISASTER PROPERTY.

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26 USC 168.

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(a) IN GENERAL.—Section 168, as amended by this Act, is
amended by adding at the end the following new subsection:
‘‘(n) SPECIAL ALLOWANCE FOR QUALIFIED DISASTER ASSISTANCE
PROPERTY.—
‘‘(1) IN GENERAL.—In the case of any qualified disaster
assistance property—
‘‘(A) the depreciation deduction provided by section
167(a) for the taxable year in which such property is placed
in service shall include an allowance equal to 50 percent
of the adjusted basis of the qualified disaster assistance
property, and
‘‘(B) the adjusted basis of the qualified disaster assistance property shall be reduced by the amount of such
deduction before computing the amount otherwise allowable as a depreciation deduction under this chapter for
such taxable year and any subsequent taxable year.
‘‘(2) QUALIFIED DISASTER ASSISTANCE PROPERTY.—For purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘qualified disaster assistance property’ means any property—
‘‘(i)(I) which is described in subsection (k)(2)(A)(i),
or
‘‘(II) which is nonresidential real property or residential rental property,
‘‘(ii) substantially all of the use of which is—
‘‘(I) in a disaster area with respect to a federally declared disaster occurring before January 1,
2010, and
‘‘(II) in the active conduct of a trade or business by the taxpayer in such disaster area,
‘‘(iii) which—

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‘‘(I) rehabilitates property damaged, or
replaces property destroyed or condemned, as a
result of such federally declared disaster, except
that, for purposes of this clause, property shall
be treated as replacing property destroyed or condemned if, as part of an integrated plan, such
property replaces property which is included in
a continuous area which includes real property
destroyed or condemned, and
‘‘(II) is similar in nature to, and located in
the same county as, the property being rehabilitated or replaced,
‘‘(iv) the original use of which in such disaster
area commences with an eligible taxpayer on or after
the applicable disaster date,
‘‘(v) which is acquired by such eligible taxpayer
by purchase (as defined in section 179(d)) on or after
the applicable disaster date, but only if no written
binding contract for the acquisition was in effect before
such date, and
‘‘(vi) which is placed in service by such eligible
taxpayer on or before the date which is the last day
of the third calendar year following the applicable disaster date (the fourth calendar year in the case of
nonresidential real property and residential rental
property).
‘‘(B) EXCEPTIONS.—
‘‘(i) OTHER BONUS DEPRECIATION PROPERTY.—The
term ‘qualified disaster assistance property’ shall not
include—
‘‘(I) any property to which subsection (k)
(determined without regard to paragraph (4)), (l),
or (m) applies,
‘‘(II) any property to which section 1400N(d)
applies, and
‘‘(III) any property described in section
1400N(p)(3).
‘‘(ii) ALTERNATIVE DEPRECIATION PROPERTY.—The
term ‘qualified disaster assistance property’ shall not
include any property to which the alternative depreciation system under subsection (g) applies, determined
without regard to paragraph (7) of subsection (g)
(relating to election to have system apply).
‘‘(iii) TAX-EXEMPT BOND FINANCED PROPERTY.—
Such term shall not include any property any portion
of which is financed with the proceeds of any obligation
the interest on which is exempt from tax under section
103.
‘‘(iv) QUALIFIED REVITALIZATION BUILDINGS.—Such
term shall not include any qualified revitalization
building with respect to which the taxpayer has elected
the application of paragraph (1) or (2) of section
1400I(a).
‘‘(v) ELECTION OUT.—If a taxpayer makes an election under this clause with respect to any class of
property for any taxable year, this subsection shall

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122 STAT. 3928

Applicability.

Applicability.

26 USC 168 note.

PUBLIC LAW 110–343—OCT. 3, 2008

not apply to all property in such class placed in service
during such taxable year.
‘‘(C) SPECIAL RULES.—For purposes of this subsection,
rules similar to the rules of subparagraph (E) of subsection
(k)(2) shall apply, except that such subparagraph shall
be applied—
‘‘(i) by substituting ‘the applicable disaster date’
for ‘December 31, 2007’ each place it appears therein,
‘‘(ii) without regard to ‘and before January 1, 2009’
in clause (i) thereof, and
‘‘(iii) by substituting ‘qualified disaster assistance
property’ for ‘qualified property’ in clause (iv) thereof.
‘‘(D) ALLOWANCE AGAINST ALTERNATIVE MINIMUM
TAX.—For purposes of this subsection, rules similar to the
rules of subsection (k)(2)(G) shall apply.
‘‘(3) OTHER DEFINITIONS.—For purposes of this subsection—
‘‘(A) APPLICABLE DISASTER DATE.—The term ‘applicable
disaster date’ means, with respect to any federally declared
disaster, the date on which such federally declared disaster
occurs.
‘‘(B) FEDERALLY DECLARED DISASTER.—The term ‘federally declared disaster’ has the meaning given such term
under section 165(h)(3)(C)(i).
‘‘(C) DISASTER AREA.—The term ‘disaster area’ has the
meaning given such term under section 165(h)(3)(C)(ii).
‘‘(D) ELIGIBLE TAXPAYER.—The term ‘eligible taxpayer’
means a taxpayer who has suffered an economic loss attributable to a federally declared disaster.
‘‘(4) RECAPTURE.—For purposes of this subsection, rules
similar to the rules under section 179(d)(10) shall apply with
respect to any qualified disaster assistance property which
ceases to be qualified disaster assistance property.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to property placed in service after December 31, 2007,
with respect disasters declared after such date.
SEC. 711. INCREASED EXPENSING FOR QUALIFIED DISASTER ASSISTANCE PROPERTY.

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26 USC 179.

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(a) IN GENERAL.—Section 179 is amended by adding at the
end the following new subsection:
‘‘(e) SPECIAL RULES FOR QUALIFIED DISASTER ASSISTANCE PROPERTY.—
‘‘(1) IN GENERAL.—For purposes of this section—
‘‘(A) the dollar amount in effect under subsection (b)(1)
for the taxable year shall be increased by the lesser of—
‘‘(i) $100,000, or
‘‘(ii) the cost of qualified section 179 disaster assistance property placed in service during the taxable year,
and
‘‘(B) the dollar amount in effect under subsection (b)(2)
for the taxable year shall be increased by the lesser of—
‘‘(i) $600,000, or
‘‘(ii) the cost of qualified section 179 disaster assistance property placed in service during the taxable year.

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3929

‘‘(2) QUALIFIED SECTION 179 DISASTER ASSISTANCE PROPERTY.—For purposes of this subsection, the term ‘qualified section 179 disaster assistance property’ means section 179 property (as defined in subsection (d)) which is qualified disaster
assistance property (as defined in section 168(n)(2)).
‘‘(3) COORDINATION WITH EMPOWERMENT ZONES AND
RENEWAL COMMUNITIES.—For purposes of sections 1397A and
1400J, qualified section 179 disaster assistance property shall
not be treated as qualified zone property or qualified renewal
property, unless the taxpayer elects not to take such qualified
section 179 disaster assistance property into account for purposes of this subsection.
‘‘(4) RECAPTURE.—For purposes of this subsection, rules
similar to the rules under subsection (d)(10) shall apply with
respect to any qualified section 179 disaster assistance property
which ceases to be qualified section 179 disaster assistance
property.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to property placed in service after December 31, 2007,
with respect disasters declared after such date.
SEC. 712. COORDINATION WITH HEARTLAND DISASTER RELIEF.

Applicability.

26 USC 179 note.

26 USC 56 note.

The amendments made by this subtitle, other than the amendments made by sections 706(a)(2), 710, and 711, shall not apply
to any disaster described in section 702(c)(1)(A), or to any expenditure or loss resulting from such disaster.

TITLE VIII—SPENDING REDUCTIONS
AND APPROPRIATE REVENUE RAISERS FOR NEW TAX RELIEF POLICY
SEC. 801. NONQUALIFIED DEFERRED COMPENSATION FROM CERTAIN
TAX INDIFFERENT PARTIES.

(a) IN GENERAL.—Subpart B of part II of subchapter E of
chapter 1 is amended by inserting after section 457 the following
new section:

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‘‘SEC. 457A. NONQUALIFIED DEFERRED COMPENSATION FROM CERTAIN TAX INDIFFERENT PARTIES.

‘‘(a) IN GENERAL.—Any compensation which is deferred under
a nonqualified deferred compensation plan of a nonqualified entity
shall be includible in gross income when there is no substantial
risk of forfeiture of the rights to such compensation.
‘‘(b) NONQUALIFIED ENTITY.—For purposes of this section, the
term ‘nonqualified entity’ means—
‘‘(1) any foreign corporation unless substantially all of its
income is—
‘‘(A) effectively connected with the conduct of a trade
or business in the United States, or
‘‘(B) subject to a comprehensive foreign income tax,
and
‘‘(2) any partnership unless substantially all of its income
is allocated to persons other than—
‘‘(A) foreign persons with respect to whom such income
is not subject to a comprehensive foreign income tax, and

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Regulations.

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PUBLIC LAW 110–343—OCT. 3, 2008

‘‘(B) organizations which are exempt from tax under
this title.
‘‘(c) DETERMINABILITY OF AMOUNTS OF COMPENSATION.—
‘‘(1) IN GENERAL.—If the amount of any compensation is
not determinable at the time that such compensation is otherwise includible in gross income under subsection (a)—
‘‘(A) such amount shall be so includible in gross income
when determinable, and
‘‘(B) the tax imposed under this chapter for the taxable
year in which such compensation is includible in gross
income shall be increased by the sum of—
‘‘(i) the amount of interest determined under paragraph (2), and
‘‘(ii) an amount equal to 20 percent of the amount
of such compensation.
‘‘(2) INTEREST.—For purposes of paragraph (1)(B)(i), the
interest determined under this paragraph for any taxable year
is the amount of interest at the underpayment rate under
section 6621 plus 1 percentage point on the underpayments
that would have occurred had the deferred compensation been
includible in gross income for the taxable year in which first
deferred or, if later, the first taxable year in which such
deferred compensation is not subject to a substantial risk of
forfeiture.
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—For purposes
of this section—
‘‘(1) SUBSTANTIAL RISK OF FORFEITURE.—
‘‘(A) IN GENERAL.—The rights of a person to compensation shall be treated as subject to a substantial risk of
forfeiture only if such person’s rights to such compensation
are conditioned upon the future performance of substantial
services by any individual.
‘‘(B) EXCEPTION FOR COMPENSATION BASED ON GAIN
RECOGNIZED ON AN INVESTMENT ASSET.—
‘‘(i) IN GENERAL.—To the extent provided in regulations prescribed by the Secretary, if compensation is
determined solely by reference to the amount of gain
recognized on the disposition of an investment asset,
such compensation shall be treated as subject to a
substantial risk of forfeiture until the date of such
disposition.
‘‘(ii) INVESTMENT ASSET.—For purposes of clause
(i), the term ‘investment asset’ means any single asset
(other than an investment fund or similar entity)—
‘‘(I) acquired directly by an investment fund
or similar entity,
‘‘(II) with respect to which such entity does
not (nor does any person related to such entity)
participate in the active management of such asset
(or if such asset is an interest in an entity, in
the active management of the activities of such
entity), and
‘‘(III) substantially all of any gain on the disposition of which (other than such deferred compensation) is allocated to investors in such entity.

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‘‘(iii) COORDINATION WITH SPECIAL RULE.—Paragraph (3)(B) shall not apply to any compensation to
which clause (i) applies.
‘‘(2) COMPREHENSIVE FOREIGN INCOME TAX.—The term ‘comprehensive foreign income tax’ means, with respect to any
foreign person, the income tax of a foreign country if—
‘‘(A) such person is eligible for the benefits of a comprehensive income tax treaty between such foreign country
and the United States, or
‘‘(B) such person demonstrates to the satisfaction of
the Secretary that such foreign country has a comprehensive income tax.
‘‘(3) NONQUALIFIED DEFERRED COMPENSATION PLAN.—
‘‘(A) IN GENERAL.—The term ‘nonqualified deferred
compensation plan’ has the meaning given such term under
section 409A(d), except that such term shall include any
plan that provides a right to compensation based on the
appreciation in value of a specified number of equity units
of the service recipient.
‘‘(B) EXCEPTION.—Compensation shall not be treated
as deferred for purposes of this section if the service provider receives payment of such compensation not later than
12 months after the end of the taxable year of the service
recipient during which the right to the payment of such
compensation is no longer subject to a substantial risk
of forfeiture.
‘‘(4) EXCEPTION FOR CERTAIN COMPENSATION WITH RESPECT
TO EFFECTIVELY CONNECTED INCOME.—In the case a foreign
corporation with income which is taxable under section 882,
this section shall not apply to compensation which, had such
compensation had been paid in cash on the date that such
compensation ceased to be subject to a substantial risk of
forfeiture, would have been deductible by such foreign corporation against such income.
‘‘(5) APPLICATION OF RULES.—Rules similar to the rules
of paragraphs (5) and (6) of section 409A(d) shall apply.
‘‘(e) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes
of this section, including regulations disregarding a substantial
risk of forfeiture in cases where necessary to carry out the purposes
of this section.’’.
(b) CONFORMING AMENDMENT.—Section 26(b)(2), as amended
by the Housing Assistance Tax Act of 2008, is amended by striking
‘‘and’’ at the end of subparagraph (V), by striking the period at
the end of subparagraph (W) and inserting ‘‘, and’’, and by adding
at the end the following new subparagraph:
‘‘(X) section 457A(c)(1)(B) (relating to determinability
of amounts of compensation).’’.
(c) CLERICAL AMENDMENT.—The table of sections of subpart
B of part II of subchapter E of chapter 1 is amended by inserting
after the item relating to section 457 the following new item:

Deadline.

26 USC 26.

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‘‘Sec. 457A. Nonqualified deferred compensation from certain tax indifferent parties.’’.

(d) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to

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26 USC 457A
note.

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122 STAT. 3932

amounts deferred which are attributable to services performed
after December 31, 2008.
(2) APPLICATION TO EXISTING DEFERRALS.—In the case of
any amount deferred to which the amendments made by this
section do not apply solely by reason of the fact that the
amount is attributable to services performed before January
1, 2009, to the extent such amount is not includible in gross
income in a taxable year beginning before 2018, such amounts
shall be includible in gross income in the later of—
(A) the last taxable year beginning before 2018, or
(B) the taxable year in which there is no substantial
risk of forfeiture of the rights to such compensation (determined in the same manner as determined for purposes
of section 457A of the Internal Revenue Code of 1986,
as added by this section).
(3) ACCELERATED PAYMENTS.—No later than 120 days after
the date of the enactment of this Act, the Secretary shall
issue guidance providing a limited period of time during which
a nonqualified deferred compensation arrangement attributable
to services performed on or before December 31, 2008, may,
without violating the requirements of section 409A(a) of the
Internal Revenue Code of 1986, be amended to conform the
date of distribution to the date the amounts are required to
be included in income.
(4) CERTAIN BACK-TO-BACK ARRANGEMENTS.—If the taxpayer is also a service recipient and maintains one or more
nonqualified deferred compensation arrangements for its
service providers under which any amount is attributable to
services performed on or before December 31, 2008, the guidance issued under paragraph (4) shall permit such arrangements to be amended to conform the dates of distribution
under such arrangement to the date amounts are required
to be included in the income of such taxpayer under this subsection.
(5) ACCELERATED PAYMENT NOT TREATED AS MATERIAL MODIFICATION.—Any amendment to a nonqualified deferred compensation arrangement made pursuant to paragraph (4) or
(5) shall not be treated as a material modification of the

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Deadline.
Guidance.

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PUBLIC LAW 110–343—OCT. 3, 2008

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PUBLIC LAW 110–343—OCT. 3, 2008

122 STAT. 3933

arrangement for purposes of section 409A of the Internal Revenue Code of 1986.
Approved October 3, 2008.

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LEGISLATIVE HISTORY—H.R. 1424:
HOUSE REPORTS: No. 110–374, Pt. 1 (Comm. on Education and Labor), Pt. 2
(Comm. on Ways and Means), and Pt. 3 (Comm. on Energy
and Commerce).
CONGRESSIONAL RECORD, Vol. 154 (2008):
Mar. 5, considered and passed House.
Oct. 1, considered and passed Senate, amended.
Oct. 3, House concurred in Senate amendments.

Æ

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