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15 February 2009
American Recovery and Reinvestment Act of 2009
Conference Report HR111-16 Part 1
Conference Report HR111-16 Part 2
Conference Report HR111-16 Part 3
Conference Report HR111-16 Part 4
[Congressional Record: February 12, 2009 (House)]
[Page H1409-H1459]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
[DOCID:cr12fe09-148]
[[pp. H1409-H1459]] CONFERENCE REPORT ON H.R. 1, AMERICAN RECOVERY AND REINVESTMENT ACT OF
2009
[[Continued from page H1408]]
[[Page H1409]]
section, is further amended by adding at the end the
following new subsection:
``(g) Collection and Reporting of Participation
Information.--
``(1) Collection of information from states.--Each State
shall collect and submit to the Secretary (and make publicly
available), in a format specified by the Secretary,
information on average monthly enrollment and average monthly
participation rates for adults and children under this
section and of the number and percentage of children who
become ineligible for medical assistance under this section
whose medical assistance is continued under another
eligibility category or who are enrolled under the State's
child health plan under title XXI. Such information shall be
submitted at the same time and frequency in which other
enrollment information under this title is submitted to the
Secretary.
``(2) Annual reports to congress.--Using the information
submitted under paragraph (1), the Secretary shall submit to
Congress annual reports concerning enrollment and
participation rates described in such paragraph.''.
(e) Effective Date.--The amendments made by subsections (b)
through (d) shall take effect on July 1, 2009.
SEC. 5005. EXTENSION OF THE QUALIFYING INDIVIDUAL (QI)
PROGRAM.
(a) Extension.--Section 1902(a)(10)(E)(iv) of the Social
Security Act (42 U.S.C. 1396a(a)(10)(E)(iv)) is amended by
striking ``December 2009'' and inserting ``December 2010''.
(b) Extending Total Amount Available for Allocation.--
Section 1933(g) of such Act (42 U.S.C. 1396u-3(g)) is
amended--
(1) in paragraph (2)--
(A) by striking ``and'' at the end of subparagraph (K);
(B) in subparagraph (L), by striking the period at the end
and inserting a semicolon; and
(C) by adding at the end the following new subparagraphs:
``(M) for the period that begins on January 1, 2010, and
ends on September 30, 2010, the total allocation amount is
$412,500,000; and
``(N) for the period that begins on October 1, 2010, and
ends on December 31, 2010, the total allocation amount is
$150,000,000.''; and
(2) in paragraph (3), in the matter preceding subparagraph
(A), by striking ``or (L)'' and inserting ``(L), or (N)''.
SEC. 5006. PROTECTIONS FOR INDIANS UNDER MEDICAID AND CHIP.
(a) Premiums and Cost Sharing Protection Under Medicaid.--
(1) In general.--Section 1916 of the Social Security Act
(42 U.S.C. 1396o) is amended--
(A) in subsection (a), in the matter preceding paragraph
(1), by striking ``and (i)'' and inserting ``, (i), and
(j)''; and
(B) by adding at the end the following new subsection:
``(j) No Premiums or Cost Sharing for Indians Furnished
Items or Services Directly by Indian Health Programs or
Through Referral Under Contract Health Services.--
``(1) No cost sharing for items or services furnished to
indians through indian health programs.--
``(A) In general.--No enrollment fee, premium, or similar
charge, and no deduction, copayment, cost sharing, or similar
charge shall be imposed against an Indian who is furnished an
item or service directly by the Indian Health Service, an
Indian Tribe, Tribal Organization, or Urban Indian
Organization or through referral under contract health
services for which payment may be made under this title.
``(B) No reduction in amount of payment to indian health
providers.--Payment due under this title to the Indian Health
Service, an Indian Tribe, Tribal Organization, or Urban
Indian Organization, or a health care provider through
referral under contract health services for the furnishing of
an item or service to an Indian who is eligible for
assistance under such title, may not be reduced by the amount
of any enrollment fee, premium, or similar charge, or any
deduction, copayment, cost sharing, or similar charge that
would be due from the Indian but for the operation of
subparagraph (A).
``(2) Rule of construction.--Nothing in this subsection
shall be construed as restricting the application of any
other limitations on the imposition of premiums or cost
sharing that may apply to an individual receiving medical
assistance under this title who is an Indian.''.
(2) Conforming amendment.--Section 1916A(b)(3) of such Act
(42 U.S.C. 1396o-1(b)(3)) is amended--
(A) in subparagraph (A), by adding at the end the following
new clause:
``(vii) An Indian who is furnished an item or service
directly by the Indian Health Service, an Indian Tribe,
Tribal Organization or Urban Indian Organization or through
referral under contract health services.''; and
(B) in subparagraph (B), by adding at the end the following
new clause:
``(x) Items and services furnished to an Indian directly by
the Indian Health Service, an Indian Tribe, Tribal
Organization or Urban Indian Organization or through referral
under contract health services.''.
(b) Treatment of Certain Property From Resources for
Medicaid and CHIP Eligibility.--
(1) Medicaid.--Section 1902 of the Social Security Act (42
U.S.C. 1396a), as amended by sections 203(c) and
211(a)(1)(A)(ii) of the Children's Health Insurance Program
Reauthorization Act of 2009 (Public Law 111-3), is amended by
adding at the end the following new subsection:
``(ff) Notwithstanding any other requirement of this title
or any other provision of Federal or State law, a State shall
disregard the following property from resources for purposes
of determining the eligibility of an individual who is an
Indian for medical assistance under this title:
``(1) Property, including real property and improvements,
that is held in trust, subject to Federal restrictions, or
otherwise under the supervision of the Secretary of the
Interior, located on a reservation, including any federally
recognized Indian Tribe's reservation, pueblo, or colony,
including former reservations in Oklahoma, Alaska Native
regions established by the Alaska Native Claims Settlement
Act, and Indian allotments on or near a reservation as
designated and approved by the Bureau of Indian Affairs of
the Department of the Interior.
``(2) For any federally recognized Tribe not described in
paragraph (1), property located within the most recent
boundaries of a prior Federal reservation.
``(3) Ownership interests in rents, leases, royalties, or
usage rights related to natural resources (including
extraction of natural resources or harvesting of timber,
other plants and plant products, animals, fish, and
shellfish) resulting from the exercise of federally protected
rights.
``(4) Ownership interests in or usage rights to items not
covered by paragraphs (1) through (3) that have unique
religious, spiritual, traditional, or cultural significance
or rights that support subsistence or a traditional lifestyle
according to applicable tribal law or custom.''.
(2) Application to chip.--Section 2107(e)(1) of such Act
(42 U.S.C. 1397gg(e)(1)), as amended by sections 203(a)(2),
203(d)(2), 214(b), 501(d)(2), and 503(a)(1) of the Children's
Health Insurance Program Reauthorization Act of 2009 (Public
Law 111-3), is amended--
(A) by redesignating subparagraphs (C) through (I), as
subparagraphs (D) through (J), respectively; and
(B) by inserting after subparagraph (B), the following new
subparagraph:
``(C) Section 1902(ff) (relating to disregard of certain
property for purposes of making eligibility
determinations).''.
(c) Continuation of Current Law Protections of Certain
Indian Property From Medicaid Estate Recovery.--Section
1917(b)(3) of the Social Security Act (42 U.S.C. 1396p(b)(3))
is amended--
(1) by inserting ``(A)'' after ``(3)''; and
(2) by adding at the end the following new subparagraph:
``(B) The standards specified by the Secretary under
subparagraph (A) shall require that the procedures
established by the State agency under subparagraph (A) exempt
income, resources, and property that are exempt from the
application of this subsection as of April 1, 2003, under
manual instructions issued to carry out this subsection (as
in effect on such date) because of the Federal responsibility
for Indian Tribes and Alaska Native Villages. Nothing in this
subparagraph shall be construed as preventing the Secretary
from providing additional estate recovery exemptions under
this title for Indians.''.
(d) Rules Applicable Under Medicaid and Chip to Managed
Care Entities With Respect to Indian Enrollees and Indian
Health Care Providers and Indian Managed Care Entities.--
(1) In general.--Section 1932 of the Social Security Act
(42 U.S.C. 1396u-2) is amended by adding at the end the
following new subsection:
``(h) Special Rules With Respect to Indian Enrollees,
Indian Health Care Providers, and Indian Managed Care
Entities.--
``(1) Enrollee option to select an indian health care
provider as primary care provider.--In the case of a non-
Indian Medicaid managed care entity that--
``(A) has an Indian enrolled with the entity; and
``(B) has an Indian health care provider that is
participating as a primary care provider within the network
of the entity,
insofar as the Indian is otherwise eligible to receive
services from such Indian health care provider and the Indian
health care provider has the capacity to provide primary care
services to such Indian, the contract with the entity under
section 1903(m) or under section 1905(t)(3) shall require, as
a condition of receiving payment under such contract, that
the Indian shall be allowed to choose such Indian health care
provider as the Indian's primary care provider under the
entity.
``(2) Assurance of payment to indian health care providers
for provision of covered services.--Each contract with a
managed care entity under section 1903(m) or under section
1905(t)(3) shall require any such entity, as a condition of
receiving payment under such contract, to satisfy the
following requirements:
``(A) Demonstration of access to indian health care
providers and application of alternative payment
arrangements.--Subject to subparagraph (C), to--
``(i) demonstrate that the number of Indian health care
providers that are participating providers with respect to
such entity are sufficient to ensure timely access to covered
Medicaid managed care services for those Indian enrollees who
are eligible to receive services from such providers; and
``(ii) agree to pay Indian health care providers, whether
such providers are participating or nonparticipating
providers with respect to the entity, for covered Medicaid
managed care services provided to those Indian enrollees who
are eligible to receive services from such providers at a
rate equal to the rate negotiated between such entity and the
provider involved or, if such a rate has not been negotiated,
at a rate that is not less than the level and amount of
payment which the entity would make for the services if the
services were furnished by a participating provider which is
not an Indian health care provider.
The Secretary shall establish procedures for applying the
requirements of clause (i) in States where there are no or
few Indian health providers.
[[Page H1410]]
``(B) Prompt payment.--To agree to make prompt payment
(consistent with rule for prompt payment of providers under
section 1932(f)) to Indian health care providers that are
participating providers with respect to such entity or, in
the case of an entity to which subparagraph (A)(ii) or (C)
applies, that the entity is required to pay in accordance
with that subparagraph.
``(C) Application of special payment requirements for
federally-qualified health centers and for services provided
by certain indian health care providers.--
``(i) Federally-qualified health centers.--
``(I) Managed care entity payment requirement.--To agree to
pay any Indian health care provider that is a federally-
qualified health center under this title but not a
participating provider with respect to the entity, for the
provision of covered Medicaid managed care services by such
provider to an Indian enrollee of the entity at a rate equal
to the amount of payment that the entity would pay a
federally-qualified health center that is a participating
provider with respect to the entity but is not an Indian
health care provider for such services.
``(II) Continued application of state requirement to make
supplemental payment.--Nothing in subclause (I) or
subparagraph (A) or (B) shall be construed as waiving the
application of section 1902(bb)(5) regarding the State plan
requirement to make any supplemental payment due under such
section to a federally-qualified health center for services
furnished by such center to an enrollee of a managed care
entity (regardless of whether the federally-qualified health
center is or is not a participating provider with the
entity).
``(ii) Payment rate for services provided by certain indian
health care providers.--If the amount paid by a managed care
entity to an Indian health care provider that is not a
federally-qualified health center for services provided by
the provider to an Indian enrollee with the managed care
entity is less than the rate that applies to the provision of
such services by the provider under the State plan, the plan
shall provide for payment to the Indian health care provider,
whether the provider is a participating or nonparticipating
provider with respect to the entity, of the difference
between such applicable rate and the amount paid by the
managed care entity to the provider for such services.
``(D) Construction.--Nothing in this paragraph shall be
construed as waiving the application of section
1902(a)(30)(A) (relating to application of standards to
assure that payments are consistent with efficiency, economy,
and quality of care).
``(3) Special rule for enrollment for indian managed care
entities.--Regarding the application of a Medicaid managed
care program to Indian Medicaid managed care entities, an
Indian Medicaid managed care entity may restrict enrollment
under such program to Indians in the same manner as Indian
Health Programs may restrict the delivery of services to
Indians.
``(4) Definitions.--For purposes of this subsection:
``(A) Indian health care provider.--The term `Indian health
care provider' means an Indian Health Program or an Urban
Indian Organization.
``(B) Indian medicaid managed care entity.--The term
`Indian Medicaid managed care entity' means a managed care
entity that is controlled (within the meaning of the last
sentence of section 1903(m)(1)(C)) by the Indian Health
Service, a Tribe, Tribal Organization, or Urban Indian
Organization, or a consortium, which may be composed of 1 or
more Tribes, Tribal Organizations, or Urban Indian
Organizations, and which also may include the Service.
``(C) Non-indian medicaid managed care entity.--The term
`non-Indian Medicaid managed care entity' means a managed
care entity that is not an Indian Medicaid managed care
entity.
``(D) Covered medicaid managed care services.--The term
`covered Medicaid managed care services' means, with respect
to an individual enrolled with a managed care entity, items
and services for which benefits are available with respect to
the individual under the contract between the entity and the
State involved.
``(E) Medicaid managed care program.--The term `Medicaid
managed care program' means a program under sections 1903(m),
1905(t), and 1932 and includes a managed care program
operating under a waiver under section 1915(b) or 1115 or
otherwise.''.
(2) Application to chip.--Section 2107(e)(1) of such Act
(42 U.S.C. 1397gg(1)), as amended by subsection (b)(2), is
amended--
(A) by redesignating subparagraph (J) as subparagraph (K);
and
(B) by inserting after subparagraph (I) the following new
subparagraph:
``(J) Subsections (a)(2)(C) and (h) of section 1932.''.
(e) Consultation on Medicaid, Chip, and Other Health Care
Programs Funded Under the Social Security Act Involving
Indian Health Programs and Urban Indian Organizations.--
(1) Consultation with tribal technical advisory group
(ttag).--The Secretary of Health and Human Services shall
maintain within the Centers for Medicaid & Medicare Services
(CMS) a Tribal Technical Advisory Group (TTAG), which was
first established in accordance with requirements of the
charter dated September 30, 2003, and the Secretary of Health
and Human Services shall include in such Group a
representative of a national urban Indian health organization
and a representative of the Indian Health Service. The
inclusion of a representative of a national urban Indian
health organization in such Group shall not affect the
nonapplication of the Federal Advisory Committee Act (5
U.S.C. App.) to such Group.
(2) Solicitation of advice under medicaid and chip.--
(A) Medicaid state plan amendment.--Section 1902(a) of the
Social Security Act (42 U.S.C. 1396a(a)), as amended by
section 501(d)(1) of the Children's Health Insurance Program
Reauthorization Act of 2009 (Public Law 111-3), (42 U.S.C.
1396a(a)) is amended--
(i) in paragraph (71), by striking ``and'' at the end;
(ii) in paragraph (72), by striking the period at the end
and inserting ``; and''; and
(iii) by inserting after paragraph (72), the following new
paragraph:
``(73) in the case of any State in which 1 or more Indian
Health Programs or Urban Indian Organizations furnishes
health care services, provide for a process under which the
State seeks advice on a regular, ongoing basis from designees
of such Indian Health Programs and Urban Indian Organizations
on matters relating to the application of this title that are
likely to have a direct effect on such Indian Health Programs
and Urban Indian Organizations and that--
``(A) shall include solicitation of advice prior to
submission of any plan amendments, waiver requests, and
proposals for demonstration projects likely to have a direct
effect on Indians, Indian Health Programs, or Urban Indian
Organizations; and
``(B) may include appointment of an advisory committee and
of a designee of such Indian Health Programs and Urban Indian
Organizations to the medical care advisory committee advising
the State on its State plan under this title.''.
(B) Application to chip.--Section 2107(e)(1) of such Act
(42 U.S.C. 1397gg(1)), as amended by subsections (b)(2) and
(d) (2), is amended--
(i) by redesignating subparagraphs (B), (C), (D), (E), (F),
(G), (H), (I), (J), and (K) as subparagraphs (D), (F), (B),
(E), (G), (I), (H), (J), (K), and (L), respectively;
(ii) by moving such subparagraphs so as to appear in
alphabetical order; and
(iii) by inserting after subparagraph (B) (as so
redesiganted and moved) the following new subparagraph:
``(C) Section 1902(a)(73) (relating to requiring certain
States to seek advice from designees of Indian Health
Programs and Urban Indian Organizations).''.
(3) Rule of construction.--Nothing in the amendments made
by this subsection shall be construed as superseding existing
advisory committees, working groups, guidance, or other
advisory procedures established by the Secretary of Health
and Human Services or by any State with respect to the
provision of health care to Indians.
(f) Effective Date.--The amendments made by this section
shall take effect on July 1, 2009.
SEC. 5007. FUNDING FOR OVERSIGHT AND IMPLEMENTATION.
(a) Oversight.--For purposes of ensuring the proper
expenditure of Federal funds under title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.), there is appropriated
to the Office of the Inspector General of the Department of
Health and Human Services, out of any money in the Treasury
not otherwise appropriated and without further appropriation,
$31,250,000 for fiscal year 2009, which shall remain
available for expenditure until September 30, 2011, and shall
be in addition to any other amounts appropriated or made
available to such Office for such purposes.
(b) Implementation of Increased FMAP.--For purposes of
carrying out section 5001, there is appropriated to the
Secretary of Health and Human Services, out of any money in
the Treasury not otherwise appropriated and without further
appropriation, $5,000,000 for fiscal year 2009, which shall
remain available for expenditure until September 30, 2011,
and shall be in addition to any other amounts appropriated or
made available to such Secretary for such purposes.
SEC. 5008. GAO STUDY AND REPORT REGARDING STATE NEEDS DURING
PERIODS OF NATIONAL ECONOMIC DOWNTURN.
(a) In General.--The Comptroller General of the United
States shall study the period of national economic downturn
in effect on the date of enactment of this Act, as well as
previous periods of national economic downturn since 1974,
for the purpose of developing recommendations for addressing
the needs of States during such periods. As part of such
analysis, the Comptroller General shall study the past and
projected effects of temporary increases in the Federal
medical assistance percentage under the Medicaid program with
respect to such periods.
(b) Report.--Not later than April 1, 2011, the Comptroller
General of the United States shall submit a report to the
appropriate committees of Congress on the results of the
study conducted under paragraph (1). Such report shall
include the following:
(1) Such recommendations as the Comptroller General
determines appropriate for modifying the national economic
downturn assistance formula for temporary adjustment of the
Federal medical assistance percentage under Medicaid (also
referred to as a ``countercyclical FMAP'') described in GAO
report number GAO-07-97 to improve the effectiveness of the
application of such percentage in addressing the needs of
States during periods of national economic downturn,
including recommendations for--
(A) improvements to the factors that would begin and end
the application of such percentage;
(B) how the determination of the amount of such percentage
could be adjusted to address State and regional economic
variations during such periods; and
(C) how the determination of the amount of such percentage
could be adjusted to be more responsive to actual Medicaid
costs incurred by States during such periods.
[[Page H1411]]
(2) An analysis of the impact on States during such periods
of--
(A) declines in private health benefits coverage;
(B) declines in State revenues; and
(C) caseload maintenance and growth under Medicaid, the
Children's Health Insurance Program, or any other publicly-
funded programs to provide health benefits coverage for State
residents.
(3) Identification of, and recommendations for addressing,
the effects on States of any other specific economic
indicators that the Comptroller General determines
appropriate.
TITLE VI--BROADBAND TECHNOLOGY OPPORTUNITIES PROGRAM
SEC. 6000. TABLE OF CONTENTS.
The table of contents of this title is as follows:
TITLE VI--BROADBAND TECHNOLOGY OPPORTUNITIES PROGRAM
Sec. 6000. Table of contents.
Sec. 6001. Broadband Technology Opportunities Program.
SEC. 6001. BROADBAND TECHNOLOGY OPPORTUNITIES PROGRAM.
(a) The Assistant Secretary of Commerce for Communications
and Information (Assistant Secretary), in consultation with
the Federal Communications Commission (Commission), shall
establish a national broadband service development and
expansion program in conjunction with the technology
opportunities program, which shall be referred to as the
Broadband Technology Opportunities Program. The Assistant
Secretary shall ensure that the program complements and
enhances and does not conflict with other Federal broadband
initiatives and programs.
(b) The purposes of the program are to--
(1) provide access to broadband service to consumers
residing in unserved areas of the United States;
(2) provide improved access to broadband service to
consumers residing in underserved areas of the United States;
(3) provide broadband education, awareness, training,
access, equipment, and support to--
(A) schools, libraries, medical and healthcare providers,
community colleges and other institutions of higher
education, and other community support organizations and
entities to facilitate greater use of broadband service by or
through these organizations;
(B) organizations and agencies that provide outreach,
access, equipment, and support services to facilitate greater
use of broadband service by low-income, unemployed, aged, and
otherwise vulnerable populations; and
(C) job-creating strategic facilities located within a
State-designated economic zone, Economic Development District
designated by the Department of Commerce, Renewal Community
or Empowerment Zone designated by the Department of Housing
and Urban Development, or Enterprise Community designated by
the Department of Agriculture;
(4) improve access to, and use of, broadband service by
public safety agencies; and
(5) stimulate the demand for broadband, economic growth,
and job creation.
(c) The Assistant Secretary may consult a State, the
District of Columbia, or territory or possession of the
United States with respect to--
(1) the identification of areas described in subsection
(b)(1) or (2) located in that State; and
(2) the allocation of grant funds within that State for
projects in or affecting the State.
(d) The Assistant Secretary shall--
(1) establish and implement the grant program as
expeditiously as practicable;
(2) ensure that all awards are made before the end of
fiscal year 2010;
(3) seek such assurances as may be necessary or appropriate
from grantees under the program that they will substantially
complete projects supported by the program in accordance with
project timelines, not to exceed 2 years following an award;
and
(4) report on the status of the program to the Committees
on Appropriations of the House of Representatives and the
Senate, the Committee on Energy and Commerce of the House of
Representatives, and the Committee on Commerce, Science, and
Transportation of the Senate, every 90 days.
(e) To be eligible for a grant under the program, an
applicant shall--
(1)(A) be a State or political subdivision thereof, the
District of Columbia, a territory or possession of the United
States, an Indian tribe (as defined in section 4 of the
Indian Self-Determination and Education Assistance Act (25
U.S.C. 450(b)) or native Hawaiian organization;
(B) a nonprofit--
(i) foundation,
(ii) corporation,
(iii) institution, or
(iv) association; or
(C) any other entity, including a broadband service or
infrastructure provider, that the Assistant Secretary finds
by rule to be in the public interest. In establishing such
rule, the Assistant Secretary shall to the extent practicable
promote the purposes of this section in a technologically
neutral manner;
(2) submit an application, at such time, in such form, and
containing such information as the Assistant Secretary may
require;
(3) provide a detailed explanation of how any amount
received under the program will be used to carry out the
purposes of this section in an efficient and expeditious
manner, including a showing that the project would not have
been implemented during the grant period without Federal
grant assistance;
(4) demonstrate, to the satisfaction of the Assistant
Secretary, that it is capable of carrying out the project or
function to which the application relates in a competent
manner in compliance with all applicable Federal, State, and
local laws;
(5) demonstrate, to the satisfaction of the Assistant
Secretary, that it will appropriate (if the applicant is a
State or local government agency) or otherwise
unconditionally obligate, from non-Federal sources, funds
required to meet the requirements of subsection (f);
(6) disclose to the Assistant Secretary the source and
amount of other Federal or State funding sources from which
the applicant receives, or has applied for, funding for
activities or projects to which the application relates; and
(7) provide such assurances and procedures as the Assistant
Secretary may require to ensure that grant funds are used and
accounted for in an appropriate manner.
(f) The Federal share of any project may not exceed 80
percent, except that the Assistant Secretary may increase the
Federal share of a project above 80 percent if--
(1) the applicant petitions the Assistant Secretary for a
waiver; and
(2) the Assistant Secretary determines that the petition
demonstrates financial need.
(g) The Assistant Secretary may make competitive grants
under the program to--
(1) acquire equipment, instrumentation, networking
capability, hardware and software, digital network
technology, and infrastructure for broadband services;
(2) construct and deploy broadband service related
infrastructure;
(3) ensure access to broadband service by community anchor
institutions;
(4) facilitate access to broadband service by low-income,
unemployed, aged, and otherwise vulnerable populations in
order to provide educational and employment opportunities to
members of such populations;
(5) construct and deploy broadband facilities that improve
public safety broadband communications services; and
(6) undertake such other projects and activities as the
Assistant Secretary finds to be consistent with the purposes
for which the program is established.
(h) The Assistant Secretary, in awarding grants under this
section, shall, to the extent practical--
(1) award not less than 1 grant in each State;
(2) consider whether an application to deploy
infrastructure in an area--
(A) will, if approved, increase the affordability of, and
subscribership to, service to the greatest population of
users in the area;
(B) will, if approved, provide the greatest broadband speed
possible to the greatest population of users in the area;
(C) will, if approved, enhance service for health care
delivery, education, or children to the greatest population
of users in the area; and
(D) will, if approved, not result in unjust enrichment as a
result of support for non-recurring costs through another
Federal program for service in the area; and
(3) consider whether the applicant is a socially and
economically disadvantaged small business concern as defined
under section 8(a) of the Small Business Act (15 U.S.C. 637).
(i) The Assistant Secretary--
(1) shall require any entity receiving a grant pursuant to
this section to report quarterly, in a format specified by
the Assistant Secretary, on such entity's use of the
assistance and progress fulfilling the objectives for which
such funds were granted, and the Assistant Secretary shall
make these reports available to the public;
(2) may establish additional reporting and information
requirements for any recipient of any assistance made
available pursuant to this section;
(3) shall establish appropriate mechanisms to ensure
appropriate use and compliance with all terms of any use of
funds made available pursuant to this section;
(4) may, in addition to other authority under applicable
law, deobligate awards to grantees that demonstrate an
insufficient level of performance, or wasteful or fraudulent
spending, as defined in advance by the Assistant Secretary,
and award these funds competitively to new or existing
applicants consistent with this section; and
(5) shall create and maintain a fully searchable database,
accessible on the Internet at no cost to the public, that
contains at least a list of each entity that has applied for
a grant under this section, a description of each
application, the status of each such application, the name of
each entity receiving funds made available pursuant to this
section, the purpose for which such entity is receiving such
funds, each quarterly report submitted by the entity pursuant
to this section, and such other information sufficient to
allow the public to understand and monitor grants awarded
under the program.
(j) Concurrent with the issuance of the Request for
Proposal for grant applications pursuant to this section, the
Assistant Secretary shall, in coordination with the
Commission, publish the non-discrimination and network
interconnection obligations that shall be contractual
conditions of grants awarded under this section, including,
at a minimum, adherence to the principles contained in the
Commission's broadband policy statement (FCC 05-15, adopted
August 5, 2005).
(k)(1) Not later than 1 year after the date of enactment of
this section, the Commission shall submit to the Committee on
Energy and Commerce of the House of Representatives and the
Committee on Commerce, Science, and Transportation of the
Senate, a report containing a national broadband plan.
(2) The national broadband plan required by this section
shall seek to ensure that all people of the United States
have access to broadband capability and shall establish
benchmarks for meeting that goal. The plan shall also
include--
(A) an analysis of the most effective and efficient
mechanisms for ensuring broadband access by all people of the
United States;
[[Page H1412]]
(B) a detailed strategy for achieving affordability of such
service and maximum utilization of broadband infrastructure
and service by the public;
(C) an evaluation of the status of deployment of broadband
service, including progress of projects supported by the
grants made pursuant to this section; and
(D) a plan for use of broadband infrastructure and services
in advancing consumer welfare, civic participation, public
safety and homeland security, community development, health
care delivery, energy independence and efficiency, education,
worker training, private sector investment, entrepreneurial
activity, job creation and economic growth, and other
national purposes.
(3) In developing the plan, the Commission shall have
access to data provided to other Government agencies under
the Broadband Data Improvement Act (47 U.S.C. 1301 note).
(l) The Assistant Secretary shall develop and maintain a
comprehensive nationwide inventory map of existing broadband
service capability and availability in the United States that
depicts the geographic extent to which broadband service
capability is deployed and available from a commercial
provider or public provider throughout each State. Not later
than 2 years after the date of the enactment of this Act, the
Assistant Secretary shall make the broadband inventory map
developed and maintained pursuant to this section accessible
by the public on a World Wide Web site of the National
Telecommunications and Information Administration in a form
that is interactive and searchable.
(m) The Assistant Secretary shall have the authority to
prescribe such rules as are necessary to carry out the
purposes of this section.
TITLE VII--LIMITS ON EXECUTIVE COMPENSATION
SEC. 7000. TABLE OF CONTENTS.
The table of contents of this title is as follows:
TITLE VII--LIMITS ON EXECUTIVE COMPENSATION
Sec. 7000. Table of contents.
Sec. 7001. Executive compensation and corporate governance.
Sec. 7002. Applicability with respect to loan modifications.
SEC. 7001. EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE.
Section 111 of the Emergency Economic Stabilization Act of
2008 (12 U.S.C. 5221) is amended to read as follows:
``SEC. 111. EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE.
``(a) Definitions.--For purposes of this section, the
following definitions shall apply:
``(1) Senior executive officer.--The term `senior executive
officer' means an individual who is 1 of the top 5 most
highly paid executives of a public company, whose
compensation is required to be disclosed pursuant to the
Securities Exchange Act of 1934, and any regulations issued
thereunder, and non-public company counterparts.
``(2) Golden parachute payment.--The term `golden parachute
payment' means any payment to a senior executive officer for
departure from a company for any reason, except for payments
for services performed or benefits accrued.
``(3) TARP recipient.--The term `TARP recipient' means any
entity that has received or will receive financial assistance
under the financial assistance provided under the TARP.
``(4) Commission.--The term `Commission' means the
Securities and Exchange Commission.
``(5) Period in which obligation is outstanding; rule of
construction.--For purposes of this section, the period in
which any obligation arising from financial assistance
provided under the TARP remains outstanding does not include
any period during which the Federal Government only holds
warrants to purchase common stock of the TARP recipient.
``(b) Executive Compensation and Corporate Governance.--
``(1) Establishment of standards.--During the period in
which any obligation arising from financial assistance
provided under the TARP remains outstanding, each TARP
recipient shall be subject to--
``(A) the standards established by the Secretary under this
section; and
``(B) the provisions of section 162(m)(5) of the Internal
Revenue Code of 1986, as applicable.
``(2) Standards required.--The Secretary shall require each
TARP recipient to meet appropriate standards for executive
compensation and corporate governance.
``(3) Specific requirements.--The standards established
under paragraph (2) shall include the following:
``(A) Limits on compensation that exclude incentives for
senior executive officers of the TARP recipient to take
unnecessary and excessive risks that threaten the value of
such recipient during the period in which any obligation
arising from financial assistance provided under the TARP
remains outstanding.
``(B) A provision for the recovery by such TARP recipient
of any bonus, retention award, or incentive compensation paid
to a senior executive officer and any of the next 20 most
highly-compensated employees of the TARP recipient based on
statements of earnings, revenues, gains, or other criteria
that are later found to be materially inaccurate.
``(C) A prohibition on such TARP recipient making any
golden parachute payment to a senior executive officer or any
of the next 5 most highly-compensated employees of the TARP
recipient during the period in which any obligation arising
from financial assistance provided under the TARP remains
outstanding.
``(D)(i) A prohibition on such TARP recipient paying or
accruing any bonus, retention award, or incentive
compensation during the period in which any obligation
arising from financial assistance provided under the TARP
remains outstanding, except that any prohibition developed
under this paragraph shall not apply to the payment of long-
term restricted stock by such TARP recipient, provided that
such long-term restricted stock--
``(I) does not fully vest during the period in which any
obligation arising from financial assistance provided to that
TARP recipient remains outstanding;
``(II) has a value in an amount that is not greater than
\1/3\ of the total amount of annual compensation of the
employee receiving the stock; and
``(III) is subject to such other terms and conditions as
the Secretary may determine is in the public interest.
``(ii) The prohibition required under clause (i) shall
apply as follows:
``(I) For any financial institution that received financial
assistance provided under the TARP equal to less than
$25,000,000, the prohibition shall apply only to the most
highly compensated employee of the financial institution.
``(II) For any financial institution that received
financial assistance provided under the TARP equal to at
least $25,000,000, but less than $250,000,000, the
prohibition shall apply to at least the 5 most highly-
compensated employees of the financial institution, or such
higher number as the Secretary may determine is in the public
interest with respect to any TARP recipient.
``(III) For any financial institution that received
financial assistance provided under the TARP equal to at
least $250,000,000, but less than $500,000,000, the
prohibition shall apply to the senior executive officers and
at least the 10 next most highly-compensated employees, or
such higher number as the Secretary may determine is in the
public interest with respect to any TARP recipient.
``(IV) For any financial institution that received
financial assistance provided under the TARP equal to
$500,000,000 or more, the prohibition shall apply to the
senior executive officers and at least the 20 next most
highly-compensated employees, or such higher number as the
Secretary may determine is in the public interest with
respect to any TARP recipient.
``(iii) The prohibition required under clause (i) shall not
be construed to prohibit any bonus payment required to be
paid pursuant to a written employment contract executed on or
before February 11, 2009, as such valid employment contracts
are determined by the Secretary or the designee of the
Secretary.
``(E) A prohibition on any compensation plan that would
encourage manipulation of the reported earnings of such TARP
recipient to enhance the compensation of any of its
employees.
``(F) A requirement for the establishment of a Board
Compensation Committee that meets the requirements of
subsection (c).
``(4) Certification of compliance.--The chief executive
officer and chief financial officer (or the equivalents
thereof) of each TARP recipient shall provide a written
certification of compliance by the TARP recipient with the
requirements of this section--
``(A) in the case of a TARP recipient, the securities of
which are publicly traded, to the Securities and Exchange
Commission, together with annual filings required under the
securities laws; and
``(B) in the case of a TARP recipient that is not a
publicly traded company, to the Secretary.
``(c) Board Compensation Committee.--
``(1) Establishment of board required.--Each TARP recipient
shall establish a Board Compensation Committee, comprised
entirely of independent directors, for the purpose of
reviewing employee compensation plans.
``(2) Meetings.--The Board Compensation Committee of each
TARP recipient shall meet at least semiannually to discuss
and evaluate employee compensation plans in light of an
assessment of any risk posed to the TARP recipient from such
plans.
``(3) Compliance by non-sec registrants.--In the case of
any TARP recipient, the common or preferred stock of which is
not registered pursuant to the Securities Exchange Act of
1934, and that has received $25,000,000 or less of TARP
assistance, the duties of the Board Compensation Committee
under this subsection shall be carried out by the board of
directors of such TARP recipient.
``(d) Limitation on Luxury Expenditures.--The board of
directors of any TARP recipient shall have in place a
company-wide policy regarding excessive or luxury
expenditures, as identified by the Secretary, which may
include excessive expenditures on--
``(1) entertainment or events;
``(2) office and facility renovations;
``(3) aviation or other transportation services; or
``(4) other activities or events that are not reasonable
expenditures for staff development, reasonable performance
incentives, or other similar measures conducted in the normal
course of the business operations of the TARP recipient.
``(e) Shareholder Approval of Executive Compensation.--
``(1) Annual shareholder approval of executive
compensation.--Any proxy or consent or authorization for an
annual or other meeting of the shareholders of any TARP
recipient during the period in which any obligation arising
from financial assistance provided under the TARP remains
outstanding shall permit a separate shareholder vote to
approve the compensation of executives, as disclosed pursuant
to the compensation disclosure rules of the Commission (which
disclosure shall include the compensation discussion and
analysis, the compensation tables, and any related material).
``(2) Nonbinding vote.--A shareholder vote described in
paragraph (1) shall not be binding on the board of directors
of a TARP recipient, and may not be construed as overruling a
decision by such board, nor to create or imply any
[[Page H1413]]
additional fiduciary duty by such board, nor shall such vote
be construed to restrict or limit the ability of shareholders
to make proposals for inclusion in proxy materials related to
executive compensation.
``(3) Deadline for rulemaking.--Not later than 1 year after
the date of enactment of the American Recovery and
Reinvestment Act of 2009, the Commission shall issue any
final rules and regulations required by this subsection.
``(f) Review of Prior Payments to Executives.--
``(1) In general.--The Secretary shall review bonuses,
retention awards, and other compensation paid to the senior
executive officers and the next 20 most highly-compensated
employees of each entity receiving TARP assistance before the
date of enactment of the American Recovery and Reinvestment
Act of 2009, to determine whether any such payments were
inconsistent with the purposes of this section or the TARP or
were otherwise contrary to the public interest.
``(2) Negotiations for reimbursement.--If the Secretary
makes a determination described in paragraph (1), the
Secretary shall seek to negotiate with the TARP recipient and
the subject employee for appropriate reimbursements to the
Federal Government with respect to compensation or bonuses.
``(g) No Impediment to Withdrawal by TARP Recipients.--
Subject to consultation with the appropriate Federal banking
agency (as that term is defined in section 3 of the Federal
Deposit Insurance Act), if any, the Secretary shall permit a
TARP recipient to repay any assistance previously provided
under the TARP to such financial institution, without regard
to whether the financial institution has replaced such funds
from any other source or to any waiting period, and when such
assistance is repaid, the Secretary shall liquidate warrants
associated with such assistance at the current market price.
``(h) Regulations.--The Secretary shall promulgate
regulations to implement this section.''.
SEC. 7002. APPLICABILITY WITH RESPECT TO LOAN MODIFICATIONS.
Section 109(a) of the Emergency Economic Stabilization Act
of 2008 (12 U.S.C. 5219(a)) is amended--
(1) by striking ``To the extent'' and inserting the
following:
``(1) In general.--To the extent''; and
(2) by adding at the end the following:
``(2) Waiver of certain provisions in connection with loan
modifications.--The Secretary shall not be required to apply
executive compensation restrictions under section 111, or to
receive warrants or debt instruments under section 113,
solely in connection with any loan modification under this
section.''.
And the Senate agreed to the same.
David Obey,
Charles Rangel,
Henry Waxman,
Managers on the Part of the House.
Daniel K. Inouye,
Max Baucus,
Harry Reid,
Managers on the Part of the Senate.
JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE
The managers on the part of the House and Senate at the
conference on the disagreeing votes of the two Houses on the
amendment of the Senate to the bill (H.R. 1), a bill making
supplemental appropriations for job preservation and
creation, infrastructure investment, energy efficiency and
science, assistance to the unemployed, and State and local
fiscal stabilization, for the fiscal year ending September
30, 2009, and for other purposes, submit the following joint
statement to the House and Senate in explanation of the
effect of the action agreed upon by the managers and
recommended in the accompanying conference report.
The Senate amendment to the text deleted the entire House
bill after the enacting clause and inserted the Senate bill.
This conference agreement includes a revised bill.
The conference agreement designates amounts in the Act as
emergency requirements pursuant to section 204(a) of S. Con.
Res. 21 (110th Congress) and section 301(b)(2) of S. Con.
Res. 70 (110th Congress), the concurrent resolutions on the
budget for fiscal years 2008 and 2009. All applicable
provisions in the Act are designated as an emergency for
purposes of pay-as-you-go principles.
DIVISION A--APPROPRIATIONS PROVISIONS
TITLE I--AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION,
AND RELATED AGENCIES
Department of Agriculture
AGRICULTURE BUILDINGS AND FACILITIES AND RENTAL PAYMENTS
The conference agreement provides $24,000,000 for the
Agriculture Buildings and Facilities and Rental Payments
account instead of $44,000,000 as proposed by the House. The
Senate bill contained no such account.
The conference agreement provides funding to address
priority maintenance, repair, and modernization investments
in USDA's headquarter buildings and facilities.
Office of Inspector General
The conference agreement provides $22,500,000 for the
Office of Inspector General as proposed by both the House and
Senate.
The conference agreement provides funding to enhance
oversight and improve accountability of the use of economic
recovery funds appropriated to the Department of Agriculture
in this Act, including $7,500,000 for the U.S. Forest
Service.
Agricultural Research Service
BUILDINGS AND FACILITIES
The conference agreement provides $176,000,000 for the
Agricultural Research Service, Buildings and Facilities
account instead of $209,000,000 as proposed by the House. The
Senate bill contained no such account.
The conference agreement provides funding to address
critical deferred maintenance of the agency's aging
laboratory and research infrastructure.
Farm Service Agency
SALARIES AND EXPENSES
The conference agreement provides $50,000,000 for the Farm
Service Agency, Salaries and Expenses account instead of
$245,000,000 as proposed by the House. The Senate bill
contained no such account.
The conference agreement provides funding to maintain and
modernize the information technology system.
Natural Resources Conservation Service
WATERSHED AND FLOOD PREVENTION OPERATIONS
The conference agreement provides $290,000,000 for the
Watershed and Flood Prevention Operations program instead of
$350,000,000 as proposed by the House and $275,000,000 as
proposed by the Senate.
Of the total amount, $145,000,000 is for purchasing and
restoring floodplain easements under the authorities of the
Emergency Watershed Protection Program. Funding is provided
for conducting a floodplain restoration enrollment process
that encompasses multiple regions of the country and that
will provide the greatest public and environmental benefits.
The conference agreement provides funding to invest in both
structural and non-structural watershed infrastructure
improvements. When considering project applications, the
agency is directed to prioritize funding for projects that
most cost-effectively provide the greatest public safety,
flood protection, economic, and environmental benefits.
With the funds provided, the agency is directed to complete
existing infrastructure projects that have already initiated
planning, design, or construction work, as well as prioritize
funding for projects that are prepared to initiate work as
soon as possible. The agency is further directed to fully
fund the cost of completing discrete functional components of
both structural and non-structural projects initiated with
the dollars provided in this conference agreement.
WATERSHED REHABILITATION PROGRAM
The conference agreement provides $50,000,000 for the
Watershed Rehabilitation Program as proposed by the House
instead of $65,000,000 as proposed by the Senate.
The conference agreement provides funding to rehabilitate
aging flood control infrastructure. The agency is directed to
prioritize funding for projects that are at greatest risk of
failure and present threats to public safety. The agency is
further directed to prioritize funding for projects that can
obligate and expend funds both cost effectively and rapidly.
Finally, the agency is directed to fully fund the cost of
completing rehabilitation projects initiated with the dollars
provided in this conference agreement.
Rural Housing Service
RURAL HOUSING INSURANCE FUND PROGRAM ACCOUNT
The conference agreement provides $200,000,000 in budget
authority as proposed by the Senate instead of $500,000,000
as proposed by the House. The amount of funding provided by
the conference agreement will support $11,472,000,000 in
direct and guaranteed single family housing loans under the
Rural Housing Insurance Fund, of which $1,000,000,000 is for
direct single family housing loans and $10,472,000,000 is for
guaranteed single family housing loans.
RURAL COMMUNITY FACILITIES PROGRAM ACCOUNT
The conference agreement includes $130,000,000 in budget
authority for loans and grants for rural community facilities
instead of $200,000,000 as proposed by the House and
$127,000,000 as proposed by the Senate.
The conference agreement provides funding to support
$1,234,000,000 in loans and grants for essential rural
community facilities including hospitals, health clinics,
health and safety vehicles and equipment, public buildings,
and child and elder care facilities. Of this amount,
$1,171,000,000 is for direct community facility loans and
$63,000,000 is for community facility grants.
Rural Business--Cooperative Service
RURAL BUSINESS PROGRAM ACCOUNT
The conference agreement includes $150,000,000 in budget
authority for rural business loans and grants as proposed by
the Senate instead of $100,000,000 as proposed by the House.
The amount of funding provided by the conference agreement
will support $3,010,000,000 in rural business loans and
grants. Of this amount, $2,990,000,000 is for guaranteed
business and industry loans and $20,000,000 is for rural
business enterprise grants.
Rural Utilities Service
RURAL WATER AND WASTE DISPOSAL PROGRAM ACCOUNT
The conference agreement includes $1,380,000,000 in budget
authority for loans and grants for water and waste disposal
facilities instead of $1,500,000,000 as proposed by the House
and $1,375,000,000 as proposed by
[[Page H1414]]
the Senate. The amount of funding provided by the conference
agreement will support $3,788,000,000 in loans and grants for
water and waste disposal facilities in rural areas. Of this
amount, $2,820,000,000 is for direct loans and $968,000,000
is for grants.
DISTANCE LEARNING, TELEMEDICINE, AND BROADBAND PROGRAM
The conference agreement includes $2,500,000,000 for the
distance learning, telemedicine, and broadband program
instead of $2,825,000,000 as proposed by the House and
$100,000,000 as proposed by the Senate.
Food and Nutrition Service
CHILD NUTRITION PROGRAMS
The conference agreement includes $100,000 for a grant
program for National School Lunch Program equipment
assistance as proposed by the Senate. The House bill
contained no such account.
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN
(WIC)
The conference agreement includes $500,000,000 for the
Special Supplemental Nutrition Program for Women, Infants,
and Children (WIC) as proposed by the Senate instead of
$100,000,000 as proposed by the House.
Of the total amount provided by the conference agreement,
$400,000,000 is for the program's contingency reserve to
ensure that the WIC program will have adequate funds to cover
potential increased participation or food costs as a result
of economic uncertainty. The conference agreement also
provides $100,000,000 from the total amount to help state
agencies implement new management information systems or
improve existing management information systems for the
program.
COMMODITY ASSISTANCE PROGRAM
The conference agreement includes $150,000,000 for the
Emergency Food Assistance Program for food purchases as
proposed by both the House and Senate. Of the total amount
provided by the conference agreement, up to $50,000,000 may
be used for administrative funding.
GENERAL PROVISIONS--THIS TITLE
SEC. 101. The conference agreement includes language to
increase the value of benefits provided through the
Supplemental Nutrition Assistance Program by 13.6 percent.
The conference agreement also includes $295,000,000 for the
cost of state administrative expenses and $5,000,000 in
administrative funding for the Food Distribution Program on
Indian Reservations.
SEC. 102. The conference agreement includes language to
provide for transitional agricultural disaster assistance.
SEC. 103. The conference agreement includes language to
carry out the Food, Conservation, and Energy Act of 2008.
SEC. 104. The conference agreement includes language to
carry out the rural development loan and grant programs
funded in this title.
SEC. 105. The conference agreement includes language to
specify the use of funds in persistent poverty counties.
TITLE II--COMMERCE, JUSTICE, SCIENCE, AND RELATED AGENCIES
DEPARTMENT OF COMMERCE
The Department is directed to submit to the House and
Senate Committees on Appropriations spending plans, signed by
the Secretary, detailing its intended allocation of funds
provided in this Act within 60 days of enactment of this Act.
Economic Development Administration
ECONOMIC DEVELOPMENT ASSISTANCE PROGRAMS
The conference agreement includes $150,000,000 for Economic
Development Assistance Programs to leverage private
investment, stimulate employment and increase incomes in
economically distressed communities. Of the amounts provided,
$50,000,000 shall be for economic adjustment assistance to
help communities recover from sudden and severe economic
dislocation and massive job losses due to corporate
restructuring and $50,000,000 may be transferred to federally
authorized, regional economic development commissions.
Bureau of the Census
PERIODIC CENSUSES AND PROGRAMS
To ensure a successful 2010 Decennial, the conference
agreement includes $1,000,000,000 to hire additional
personnel, provide required training, increase targeted media
purchases, and improve management of other operational and
programmatic risks. Of the amounts provided, up to
$250,000,000 shall be for partnership and outreach efforts to
minority communities and hard-to-reach populations.
National Telecommunications and Information Administration
BROADBAND TECHNOLOGY OPPORTUNITIES PROGRAM
The conference agreement includes $4,700,000,000 for NTIA's
Broadband Technology Opportunities Program (TOP), to be
available until September 30, 2010. Funding is provided to
award competitive grants to accelerate broadband deployment
in unserved and underserved areas and to strategic
institutions that are likely to create jobs or provide
significant public benefits. Of the amounts provided,
$350,000,000 shall establish the State Broadband Data and
Development Grant program, as authorized by Public Law 110-
385 and for the development and maintenance of a national
broadband inventory map as authorized by division B of this
Act. In addition, $200,000,000 shall be for competitive
grants for expanding public computer center capacity;
$250,000,000 shall be for competitive grants for innovative
programs to encourage sustainable broadband adoption; and
$10,000,000 is to be transferred to the Department of
Commerce Inspector General for audits and oversight of funds
provided under this heading, to be available until expended.
DIGITAL-TO-ANALOG CONVERTER BOX PROGRAM
The conference agreement includes $650,000,000 for
additional implementation and administration of the digital-
to-analog converter box coupon program, including additional
coupons to meet new projected demands and consumer support,
outreach and administration. Of the amounts provided, up to
$90,000,000 may be used for education and outreach to
vulnerable populations, including one-on-one assistance for
converter box installation.
National Institute of Standards and Technology
SCIENTIFIC AND TECHNICAL RESEARCH AND SERVICES
The conference agreement includes $220,000,000 for
research, competitive grants, additional research fellowships
and advanced research and measurement equipment and supplies.
In addition, $20,000,000 is provided by transfer from the
Health Information Technology (HIT) initiative within this
Act. For HIT activities, NIST is directed to create and test
standards related to health security and interoperability in
conjunction with partners at the Department of Health and
Human Services.
CONSTRUCTION OF RESEARCH FACILITIES
The conference agreement includes $360,000,000 to address
NIST's backlog of maintenance and renovation and for
construction of new facilities and laboratories. Of the
amounts provided, $180,000,000 shall be for the competitive
construction grant program for research science buildings,
including fiscal year 2008 and 2009 competitions.
National Oceanic and Atmospheric Administration
OPERATIONS, RESEARCH, AND FACILITIES
The conference agreement includes $230,000,000 for NOAA
operations, research, and facilities to address a backlog of
research, restoration, navigation, conservation and
management activities.
Procurement, Acquisition and Construction
The conference agreement includes $600,000,000 for
construction and repair of NOAA facilities, ships and
equipment, to improve weather forecasting and to support
satellite development. Of the amounts provided, $170,000,000
shall address critical gaps in climate modeling and establish
climate data records for continuing research into the cause,
effects and ways to mitigate climate change.
OFFICE OF INSPECTOR GENERAL
The conference agreement includes $6,000,000 for the Office
of Inspector General, to remain available until September 30,
2013.
DEPARTMENT OF JUSTICE
The Department is directed to submit to the House and
Senate Committees on Appropriations a spending plan, signed
by the Attorney General, detailing its intended allocation of
funds provided in this Act within 60 days of enactment of
this Act.
General Administration
OFFICE OF INSPECTOR GENERAL
The conference agreement includes $2,000,000 for the Office
of Inspector General, to be available until September 30,
2013.
State and Local Law Enforcement Activities
Office on Violence Against Women
VIOLENCE AGAINST WOMEN PREVENTION AND PROSECUTION PROGRAMS
The conference agreement provides $225,000,000 for Violence
Against Women Prevention and Prosecution Programs, to be
available until September 30, 2010, of which $175,000,000 is
for the STOP Violence Against Women Formula Assistance
Program, and $50,000,000 is for transitional housing
assistance grants. No administrative overhead costs shall be
deducted from the programs funded under this accout.
Office of Justice Programs
STATE AND LOCAL LAW ENFORCEMENT ASSISTANCE
The conference agreement includes a total of $2,765,000,000
for the following state and local law enforcement assistance
programs, to be available until September 30, 2010. No
administrative overhead costs shall be deducted from the
programs funded under this account.
Edward Byrne Memorial Justice Assistance Grants..........$2,000,000,000
Byrne competitive grants....................................225,000,000
Rural Law Enforcement.......................................125,000,000
Southwest Border/Project Gunrunner...........................40,000,000
Victims Compensation........................................100,000,000
Tribal Law Enforcement Assistance...........................225,000,000
Internet Crimes Against Children Task Force..................50,000,000
________________
Total...................................................2,765,000,000
Byrne-Justice Assistance Grants.--The conference agreement
provides $2,000,000,000 for Edward Byrne Memorial Justice
Assistance
[[Page H1415]]
Grants. This funding is allocated by formula to State and
local law enforcement agencies to help prevent, fight, and
prosecute crime.
Byrne Competitive Grants.--The conference agreement
provides $225,000,000 for competitive, peer-reviewed grants
to units of State, local, and tribal government, and to
national, regional, and local non-profit organizations to
prevent crime, improve the administration of justice, provide
services to victims of. crime, support critical nurturing and
mentoring of at-risk children and youth, and for other
similar activities.
Rural Law Enforcement.--The conference agreement provides
$125,000,000 for grants to combat the persistent problems of
drug-related crime in rural America. Funds will be available
on a competitive basis for drug enforcement and other law
enforcement activities in rural states and rural areas,
including for the hiring of police officers and for community
drug prevention and treatment programs.
Southwest Border/Project Gunrunner.--The conference
agreement provides $40,000,000 for competitive grants for
programs that provide assistance and equipment to local law
enforcement along the Southern border or in High-Intensity
Drug Trafficking Areas to combat criminal narcotic activity,
of which $10,000,000 shall be available, by transfer, to the
Bureau of Alcohol, Tobacco, Firearms, and Explosives for
Project Gunrunner.
Victims Compensation.--The conference agreement provides
$100,000,000 for formula grants to be administered through
the Justice Department's Office for Victims of Crime to
support State compensation and assistance programs for
victims and survivors of domestic violence, sexual assault,
child abuse, drunk driving, homicide, and other Federal and
state crimes.
Tribal Law Enforcement Assistance.--The conference
agreement provides $225,000,000 for grants to assist American
Indian and Alaska Native tribes, to be distributed under the
guidelines set forth by the Correctional Facilities on Tribal
Lands program. The Department is directed to coordinate with
the Bureau of Indian Affairs, and to consider the following
in the grant approval process: (1) the detention bed space
needs of an applicant tribe; and (2) the violent crime
statistics of the tribe.
Internet Crimes Against Children (ICAC) Task Force
Program.--The conference agreement provides $50,000,000 to
help State and local law enforcement agencies enhance
investigative responses to offenders who use the Internet,
online communication systems, or other computer technology to
sexually exploit children.
Community Oriented Policing Services
COPS Hiring Grants.--The conference agreement provides
$1,000,000,000 for grants to State, local, and tribal
governments for the hiring of additional law enforcement
officers, to be available until September 30, 2010. No
administrative overhead costs shall be deducted from the
programs funded under this account.
SALARIES AND EXPENSES
The conference agreement provides $10,000,000 for
management and administrative costs of Department of Justice
grants funded in this Act.
SCIENCE
National Aeronautics and Space Administration
NASA is directed to submit to the House and Senate
Committees on Appropriations a spending plan, signed by the
Administrator, detailing its intended allocation of funds
provided in this Act within 60 days of enactment of this Act.
SCIENCE
The conference agreement includes $400,000,000 for Science,
to remain available until September 30, 2010. Funding is
included herein to accelerate the development of the tier 1
set of Earth science climate research missions recommended by
the National Academies Decadal Survey and to increase the
agency's supercomputing capabilities.
AERONAUTICS
The conference agreement includes $150,000,000 for
aeronautics, to remain available until September 30, 2010.
These funds are available for system-level research,
development and demonstration activities related to aviation
safety, environmental impact mitigation and the Next
Generation Air Transportation System (NextGen).
EXPLORATION
The conference agreement includes $400,000,000 for
exploration, to remain available until September 30, 2010.
CROSS AGENCY SUPPORT
The conference agreement includes $50,000,000 for cross
agency support, to remain available until September 30, 2010.
In allocating these funds, NASA shall give its highest
priority to restore NASA-owned facilities damaged from
hurricanes and other natural disasters occurring during
calendar year 2008.
OFFICE OF INSPECTOR GENERAL
The conference agreement includes $2,000,000 for the Office
of Inspector General, to remain available until September 30,
2013.
National Science Foundation
NSF is directed to submit to the House and Senate
Committees on Appropriations a spending plan, signed by the
Director, detailing its intended allocation of funds provided
in this Act within 60 days of enactment of this Act.
RESEARCH AND RELATED ACTIVITIES
For research and related activities, the conference
agreement provides a total of $2,500,000,000, to remain
available until September 30, 2010. Within this amount,
$300,000,000 shall be available solely for the major research
instrumentation program and $200,000,000 shall be available
for activities authorized by title II of Public Law 100-570
for academic facilities modernization. In allocating the
resources provided under this heading, the conferees direct
that NSF support all research divisions and support
advancements in supercomputing technology.
EDUCATION AND HUMAN RESOURCES
The conference agreement includes $100,000,000 for
education and human resources, to remain available until
September 30, 2010. These funds shall be allocated as
follows:
Robert Noyce Scholarship Program............................$60,000,000
Math and Science Partnerships................................25,000,000
Professional Science Master's Programs.......................15,000,000
MAJOR RESEARCH EQUIPMENT AND FACILITIES CONSTRUCTION
The conference agreement includes $400,000,000 for major
research equipment and facilities construction, to remain
available until September 30, 2010.
OFFICE OF INSPECTOR GENERAL
The conference agreement includes $2,000,000 for the Office
of Inspector General, to remain available until September 30,
2013.
GENERAL PROVISION--THIS TITLE
Sec. 201. For COPS Hiring Grants, waives the $75,000 per
officer cap codified at 42 U.S.C. 6dd-3(c) and the 25 percent
local match requirement codified at 42 U.S.C. 3796dd(g).
TITLE III--DEFENSE
DEPARTMENT OF DEFENSE
Facility Infrastructure Investments, Defense
Facilities Sustainment, Restoration and Modernization
covers expenses associated with maintaining the physical
plant at Department of Defense posts, camps and stations. The
conference agreement provides $4,240,000,000 for Facilities
Sustainment, Restoration and Modernization and directs that
this funding shall only be available for facilities in the
United States and its territories. Further, of the funds
provided, $400,000,000 is for the Defense Health Program as
described elsewhere in this statement. Of the funds provided
in Operation and Maintenance, Army, $153,500,000 shall be
used for barracks renovations. The remainder of the funds
provided shall be used to invest in energy efficiency
projects and to repair and modernize Department of Defense
facilities. The Secretary of Defense shall provide a written
report to the congressional defense committees no later than
60 days after enactment of this Act with a project listing of
how these funds will be obligated.
Near Term Energy Efficiency Technology Demonstrations and Research
The conference agreement provides $75,000,000 for Research,
Development, Test and Evaluation, Army; $75,000,000 for
Research, Development, Test and Evaluation, Navy; $75,000,000
for Research, Development, Test and Evaluation, Air Force;
and $75,000,000 for Research, Development, Test and
Evaluation, Defense-Wide only for the funding of research,
development, test and evaluation projects, including pilot
projects, demonstrations and energy efficient manufacturing
enhancements. Funds are for improvements in energy generation
and efficiency, transmission, regulation, storage, and for
use on military installations and within operational forces,
to include research and development of energy from fuel
cells, wind, solar, and other renewable energy sources to
include biofuels and bioenergy. The Secretary of Defense is
directed to provide a report to the congressional defense
committees detailing the planned use of these funds within 60
days after enactment of this Act. Additionally, the Secretary
of Defense is directed to provide a report on the progress
made by this effort to the congressional defense committees
not later than one year after enactment of this Act and an
additional report not later than two years after enactment of
this Act.
Defense Health Program
The conference agreement provides $400,000,000 for
Facilities Sustainment, Restoration, and Modernization. Of
these funds, $220,000,000 shall be for the Army, $50,000,000
shall be for the Navy, and $130,000,000 shall be for the Air
Force. Funds shall be used to invest in energy efficiency
projects and to improve, repair and modernize military
medical facilities in the United States and its territories.
The Service Surgeons General shall provide written reports to
the congressional defense committees no later than 60 days
after enactment of this Act with a project listing of how and
when these funds will be obligated.
Office of the Inspector General
The conference agreement provides $15,000,000 for the
Office of the Inspector General to conduct vigorous oversight
of Department of Defense programs.
[[Page H1416]]
TITLE IV--ENERGY AND WATER DEVELOPMENT
DEPARTMENT OF DEFENSE--CIVIL
Department of the Army
Corps of Engineers--Civil
INTRODUCTION
The conferees agree to provide an additional $4,600,000,000
for the Corps of Engineers as proposed by the Senate instead
of $4,500,000,000 as proposed by the House. The conferees
direct the Corps to consider the following criteria when
allocating funds:
(a) Programs, projects, or activities that can be
obligated/executed quickly;
(b) Programs, projects, or activities that will result in
high, immediate employment;
(c) Programs, projects, or activities that have little
schedule risk;
(d) Programs, projects, or activities that will be executed
by contract or direct hire of temporary labor; and
(e) Programs, projects, or activities that will complete
either a project phase, a project, or will provide a useful
service that does not require additional funding.
Further, the Corps is directed to utilize the criteria
above to execute authorized projects in order to maximize
national benefits without regard to the business line amounts
proposed in the Senate report, except where statutory
language specifies an amount.
INVESTIGATIONS
The conferees agree to provide an additional $25,000,000 as
proposed by the Senate. The House proposed no funding for
this account. The conference agreement includes or modifies
several provisions proposed by the Senate related to
availability of funds and reprogramming.
CONSTRUCTION
The conferees agree to provide an additional $2,000,000,000
as proposed by both the House and the Senate.
The conference agreement includes a provision proposed by
the Senate regarding availability of funds for authorized
environmental infrastructure projects. The House bill
included no similar provision.
The conference agreement includes several provisions
proposed by the House and the Senate regarding limitations on
reimbursement, annual program and total project cost limits,
the Inland Waterways Trust Fund, and availability of funds.
The conference agreement deletes a provision proposed by
the House directing the prioritization of funds. The Senate
carried report language addressing prioritization.
The conference agreement includes a provision proposed by
the Senate granting the Secretary of the Army unlimited
reprogramming authority for funds provided under this
heading. The House bill included no similar provision.
The conference agreement includes a provision proposed by
the House requiring specific reports on obligation and
expenditure of funds provided in this Act. The Senate bill
included no similar provision.
MISSISSIPPI RIVER AND TRIBUTARIES
The conferees agree to provide an additional $375,000,000
instead of $250,000,000 as proposed by the House and
$500,000,000 as proposed by the Senate.
The conference agreement deletes a provision proposed by
the House directing the prioritization of funds. The Senate
carried report language addressing prioritization.
The conference agreement includes several provisions
proposed by the House and the Senate regarding total project
cost limits and availability of funds.
The conference agreement includes a provision proposed by
the Senate granting the Secretary of the Army unlimited
reprogramming authority for funds provided under this
heading. The House bill included no similar provision.
The conference agreement includes a provision proposed by
the House requiring specific reports on obligation and
expenditure of funds provided in this Act. The Senate bill
included no similar provision.
OPERATION AND MAINTENANCE
The conferees agree to provide an additional $2,075,000,000
instead of $2,225,000,000 as proposed by the House and
$1,900,000,000 as proposed by the Senate.
The conference agreement deletes a provision proposed by
the House directing the prioritization of funds. The Senate
carried report language addressing prioritization.
The conference agreement includes several provisions
proposed by the House and the Senate regarding total project
cost limits and availability of funds.
The conference agreement deletes a provision proposed by
the Senate relating to activities authorized in section 9004
of Public Law 110-114. The House bill included no similar
provision.
The conference agreement includes a provision proposed by
the Senate relating to annual project limitations set forth
in section 9006 of Public Law 110-114. The House bill
included no similar provision.
The conference agreement includes a provision proposed by
the Senate granting the Secretary of the Army unlimited
reprogramming authority for funds provided under this
heading. The House bill included no similar provision.
The conference agreement includes a provision proposed by
the House requiring specific reports on obligation and
expenditure of funds provided in this Act. The Senate bill
included no similar provision.
REGULATORY PROGRAM
The conferees agree to provide an additional $25,000,000 as
proposed by both the House and the Senate.
FORMERLY UTILIZED SITES REMEDIAL ACTION PROGRAM
The conferees agree to provide an additional $100,000,000
as proposed by the Senate. The House proposed no funding for
this account.
The conference agreement includes or modifies several
provisions proposed by the Senate related to availability of
funds and reprogramming.
The conference agreement includes a new provision requiring
specific reports on obligation and expenditure of funds
provided in this Act.
FLOOD CONTROL AND COASTAL EMERGENCIES
The conferees provide no additional funds, as proposed by
the House, instead of $50,000,000 as proposed by the Senate.
DEPARTMENT OF INTERIOR
Bureau of Reclamation
WATER AND RELATED RESOURCES
The conferees agree to provide an additional $1,000,000,000
for Water and Related Resources instead of $500,000,000 as
proposed by the House and $1,400,000,000 as proposed by the
Senate. The conferees direct the Bureau to consider the
following criteria when allocating funds:
(a) Programs, projects, or activities that can be
obligated/executed quickly;
(b) Programs, projects, or activities that will result in
high, immediate employment;
(c) Programs, projects, or activities that have little
schedule risk;
(d) Programs, projects, or activities that will be executed
by contract or direct hire of temporary labor; and
(e) Programs, projects, or activities that will complete
either a project phase, a project, or will provide a useful
service that does not require additional funding.
Further, the Bureau is directed to utilize the criteria
above to execute authorized projects in order to maximize
national benefits without regard to the amounts proposed in
the Senate report by purpose, except where statutory language
specifies an amount.
The conference agreement includes a provision proposed by
the House related to expenditures for authorized title XVI
projects. The Senate bill included a similar provision.
The conference agreement deletes several provisions
proposed by the Senate related to the Bureau of Reclamation's
special fee account; contributed funds; funds advanced under
43 U.S.C. 397a; and limitations on funding programs, projects
or activities that receive funding in Acts making
appropriations for Energy and Water Development. The House
bill included no similar provisions.
The conference agreement includes provisions proposed by
the Senate relating to availability of funds for projects
that can be completed with funds provided in this Act and the
availability of funds for authorized activities under the
Central Utah Project Completion Act, California-Bay Delta
Restoration Act, and the bureau-wide inspection of canals
program in urbanized areas. The House bill included no
similar provisions.
The conference agreement includes a provision proposed by
the Senate relating to authorized rural water projects. The
House bill included a similar provision.
The conference agreement modifies provisions proposed by
both the House and the Senate relating to repayment of
reimbursable activities.
The conference agreement includes a provision proposed by
the Senate relating to availability of funds for costs
associated with supervision, inspection, overhead,
engineering and design on projects. The House bill included
no similar provision.
The conference agreement includes a provision proposed by
the Senate granting the Secretary of Interior unlimited
reprogramming authority for funds provided under this
heading. The House bill included no similar provision.
The conference agreement includes a new provision requiring
specific reports on obligation and expenditure of funds
provided in this Act.
DEPARTMENT OF ENERGY
Energy Programs
ENERGY EFFICIENCY AND RENEWABLE ENERGY
The conferees agree to provide an additional
$16,800,000,000 for the Energy Efficiency and Renewable
Energy program, instead of $18,500,000,000 as proposed by the
House and $14,398,000,000 as proposed by the Senate. The
conference agreement includes $2,500,000,000 for applied
research, development, demonstration and deployment
activities to include $800,000,000 for projects related to
biomass and $400,000,000 for geothermal activities and
projects. Within available funds, the conferees direct
$50,000,000 for the Department to support research to
increase the efficiency of information and communications
technology and improve standards.
Funds under this heading include $3,200,000,000 for the
Energy Efficiency and Conservation Block Grant (EECBG)
program, instead of $3,500,000,000 as proposed by the House
and $4,200,000,000 as proposed by the Senate. Of the funds
provided for the EECBG program, $400,000,000 shall be awarded
on a competitive basis to grant applicants.
Funds under this heading include $5,000,000,000 for the
Weatherization Assistance Program, instead of $6,200,000,000
as proposed in the House bill. The Senate proposed
$2,900,000,000 in report language.
[[Page H1417]]
Funds under this heading include $3,100,000,000 for the
State Energy Program, instead of $3,400,000,000 as proposed
in the House bill. The Senate proposed $500,000,000 in report
language.
Funds under this heading include $2,000,000,000 for
Advanced Battery Manufacturing grants to support the
manufacturing of advanced vehicle batteries and components,
as proposed by the Senate, instead of $1,000,000,000 as
proposed by the House. The conference agreement does not
include the Advanced Battery Loan Guarantee program as
proposed by the House. The Senate bill carried no similar
provision.
Funds under this heading include $300,000,000 for the
Alternative Fueled Vehicles Pilot Grant Program, instead of
$400,000,000 as proposed in the House bill. The Senate
proposed $350,000,000 in report language.
Funds under this heading include $400,000,000 for
Transportation Electrification, instead of $200,000,000 as
proposed in the House bill. The Senate proposed $200,000,000
in report language.
Funds under this heading include $300,000,000 for the
Energy Efficient Appliance Rebate program and the Energy Star
Program as proposed by the House. The Senate bill carried no
similar provision.
The conference agreement includes language proposed by both
the House and Senate that accelerates the hiring of personnel
for the Energy Efficiency and Renewable Energy program.
The conference agreement does not include $500,000,000 for
incentives for Energy Recovery of Industrial Waste Heat, as
proposed by the House. The Senate bill carried no similar
provision.
The conference agreement does not include $1,000,000,000
for grants to Institutional Entities for Energy
Sustainability and Efficiency as proposed in the House bill.
The Senate proposed $1,600,000,000 in report language.
The conference agreement does not include $500,000,000 for
the cost of guaranteed loans to Institutional Entities for
Energy Sustainability and Efficiency as proposed in the House
bill. The Senate bill carried no similar provision.
ELECTRICITY DELIVERY AND ENERGY RELIABILITY
The conferees agree to provide an additional $4,500,000,000
for the Electricity Delivery and Energy Reliability program,
as proposed by the House and the Senate. The conferees
provide $100,000,000 within these funds for worker training,
as proposed by the House and the Senate.
The conferees include language enabling the Secretary to
use funds for transmission improvements authorized in any
subsequent Act, as proposed by the House. The Senate bill
contained no similar provision.
The conferees include language proposed by the Senate that
accelerates the hiring of personnel for the Electricity
Delivery and Energy Reliability program. The House bill
contained no similar provision.
The conference agreement modifies bill language proposed by
the Senate providing funds to conduct a resource assessment
of future demand and transmission requirements. The House
bill contained no similar provision.
The conference agreement modifies bill language proposed by
the Senate for technical assistance to the North American
Electric Reliability Corporation, the regional reliability
entities, the States, and other transmission owners and
operators for the formation of interconnection-based
transmission plans for the Eastern and Western
Interconnections and ERCOT. The House bill contained no
similar provision.
The conference agreement includes bill language proposed by
the Senate providing $10,000,000 to implement section 1305 of
Public Law 110-140. The House bill contained no similar
provision.
FOSSIL ENERGY RESEARCH AND DEVELOPMENT
The conferees agree to provide an additional $3,400,000,000
for the Fossil Energy Research and Development program,
instead of $2,400,000,000 as proposed by the House and
$4,600,000,000 as proposed by the Senate.
Funds under this heading include $1,000,000,000 for fossil
energy research and development programs; $800,000,000 for
additional amounts for the Clean Coal Power Initiative Round
III Funding Opportunity Announcement; $1,520,000,000 for a
competitive solicitation for a range of industrial carbon
capture and energy efficiency improvement projects, including
a small allocation for innovative concepts for beneficial
CO<INF>2</INF> reuse; $50,000,000 for a competitive
solicitation for site characterization activities in geologic
formations; $20,000,000 for geologic sequestration training
and research grants; and $10,000,000 for program direction
funding.
The conference agreement does not include $2,400,000,000
for Section 702 of the Energy Independence and Security Act
of 2007, as proposed by the House. The Senate bill contained
no similar provision.
The conference agreement deletes several provisions
proposed by the Senate delineating funding within this
account. The House bill contained no similar provisions.
NON-DEFENSE ENVIRONMENTAL CLEANUP
The conferees agree to provide an additional $483,000,000
for the Non-Defense Environmental Cleanup program, as
proposed by the Senate. The House bill carried no similar
provision.
URANIUM ENRICHMENT DECONTAMINATION AND DECOMMISSIONING FUND
The conferees agree to provide an additional $390,000,000
for the Uranium Enrichment Decontamination and
Decommissioning Fund, as proposed by the Senate. The House
bill carried no similar provision. Within available funds,
$70,000,000 is provided for the title X uranium and thorium
program.
SCIENCE
The conferees agree to provide an additional $1,600,000,000
for the Science program. After taking into account the
additional $400,000,000 provided for Advanced Research
Projects Agency-Energy (ARPA-E) in a separate account, the
funding level for Science is the same as proposed by the
House, instead of $330,000,000 as proposed by the Senate.
The conference agreement does not include $100,000,000 for
advanced scientific computing as proposed in the House bill.
The Senate bill carried no similar provision.
ADVANCED RESEARCH PROJECTS AGENCY-ENERGY
The conferees agree to provide $400,000,000 for the
Advanced Research Projects Agency-Energy authorized under
section 5012 of the America COMPETES Act (42 U.S.C. 16538).
This funding was provided by the House under ``Science''. The
Senate bill carried no similar provision.
TITLE 17--INNOVATIVE TECHNOLOGY LOAN GUARANTEE PROGRAM
The conference agreement includes $6,000,000,000 for the
cost of guaranteed loans authorized by section 1705 of the
Energy Policy Act of 2005, instead of $8,000,000,000 as
proposed by the House and $9,500,000,000 as proposed by the
Senate.
This new loan program would provide loan guarantees for
renewable technologies and transmission technologies. The
$6,000,000,000 in appropriated funds is expected to support
more than $60,000,000,000 in loans for these projects.
Funds under this heading include $10,000,000 for
administrative expenses to support the Advanced Technology
Vehicles Manufacturing Loan program. The House bill and the
Senate bill included no similar provision.
The conference agreement does not include a provision
proposed by the Senate providing $50,000,000,000 in
additional loan authority for commitments to guarantee loans
under section 1702(b)(2) of the Energy Policy Act of 2005.
The House bill contained no similar provision.
OFFICE OF THE INSPECTOR GENERAL
The conferees agree to provide an additional $15,000,000
for the Office of Inspector General, as proposed by the
House. The Senate bill included a similar provision.
ATOMIC ENERGY DEFENSE ACTIVITIES
National Nuclear Security Administration
WEAPONS ACTIVITIES
The conference agreement does not provide $1,000,000,000
for the National Nuclear Security Administration, Weapons
Activities, as proposed by the Senate. The House bill
contained no similar provision.
Environmental and Other Defense Activities
DEFENSE ENVIRONMENTAL CLEANUP
The conferees agree to provide an additional $5,127,000,000
for the Defense Environmental Cleanup program, instead of
$500,000,000 as proposed by the House and $5,527,000,000 as
proposed by the Senate.
Construction, Rehabilitation, Operation, and Maintenance, Western Area
Power Administration
The conference agreement includes bill language proposed by
the Senate providing $10,000,000 in non-reimbursable funds
for construction, rehabilitation, operations, and maintenance
for the Western Area Power Administration (WAPA). The House
bill contained no similar provision.
The conference agreement includes bill language proposed by
the Senate providing additional staffing levels for the WAPA.
The House bill contained no similar provision.
Legislative language is also included in the General
Provisions of this title providing the WAPA with
$3,250,000,000 in borrowing authority, as proposed by both
the House and the Senate.
GENERAL PROVISIONS--THIS TITLE
The conference agreement includes a provision proposed by
both the House and Senate increasing the borrowing authority
ceiling for the Bonneville Power Administration by
$3,250,000,000.
The conference agreement includes a provision proposed by
the Senate providing the Western Area Power Administration
$3,250,000,000 in borrowing authority. The House bill
contained a similar provision.
The conference agreement modifies a provision proposed by
the House granting transfer authority to the Secretary of
Energy under specific circumstances. The Senate bill
contained no similar provision.
The conference agreement includes a provision proposed by
the House making technical corrections to section 543(a) of
the Energy Independence and Security Act of 2007. The Senate
bill contained no similar provision.
The conference agreement modifies a provision proposed by
the House amending title XIII of the Energy Independence and
Security Act of 2007 to provide financial support
[[Page H1418]]
to smart grid demonstration projects including those in
urban, suburban, rural and tribal areas including areas where
electric system assets are controlled by nonprofit entities
and areas where the electric system assets are controlled by
investor owned utilities. The Senate bill contained a similar
provision.
The conference agreement modifies a provision proposed by
the House amending title XVII of the Energy Independence and
Security Act of 2007 creating a temporary loan guarantee
program for the rapid deployment of renewable energy and
electric power transmission projects. The Senate bill
contained a similar provision.
The conference agreement modifies a provision proposed by
the House expanding the eligibility of low income households
for the Weatherization Assistance Program and increasing the
funding assistance level per dwelling unit. The provision
also provides guidance on effective use of funds. The Senate
bill contained a similar provision.
The conference agreement includes a provision proposed by
the Senate making technical corrections to redesignate two
paragraphs of the Public Utility Regulatory Policies Act of
1978. The House bill contained no similar provision.
The conference agreement includes a provision proposed by
the House providing the Secretary of Energy further direction
in completing the 2009 National Electric Transmission
Congestion Study. The Senate bill contained no similar
provision.
The conference agreement includes a provision proposed by
the House requiring as a condition of receipt of State Energy
Program grants, a Governor to notify the Secretary of Energy
that the Governor has obtained certain assurances, regarding
certain regulatory policies, building code requirements and
the prioritization of existing state programs. The Senate
bill contained a similar provision.
The conference agreement deletes a provision proposed by
the House waiving per project limitations for grants provided
under section 399A(f)(2), (3), and (4) of the Energy Policy
and Conservation Act and establishes that grants shall be
available for not more than an amount equal to 80 percent of
the costs of the project for which the grant is provided. The
Senate bill contained no similar provision.
TITLE V--FINANCIAL SERVICES AND GENERAL GOVERNMENT
DEPARTMENT OF THE TREASURY
Treasury Inspector General for Tax Administration
salaries and expenses
The conference agreement provides $7,000,000 for oversight
and audits of the administration of the making work pay tax
credit and economic recovery payments under the American
Recovery and Reinvestment Act, as proposed by the Senate. The
House did not include funds for this account.
Community Development Financial Institutions Fund Program Account
The conference agreement provides $100,000,000 for
qualified applicants under the fiscal year 2009 funding round
of the Community Development Financial Institutions Fund
program, instead of no funds as proposed by the House and
$250,000,000 as proposed by the Senate.
Internal Revenue Service
HEALTH INSURANCE TAX CREDIT ADMINISTRATION
The conference agreement provides $80,000,000 to cover
expected additional costs associated with implementation of
the TAA Health Coverage Improvement Act of 2009.
DISTRICT OF COLUMBIA
Federal Payments
FEDERAL PAYMENT TO THE DISTRICT OF COLUMBIA
WATER AND SEWER AUTHORITY
The conference agreement does not provide funding for the
District of Columbia Water and Sewer Authority, instead of
$125,000,000 as proposed by the Senate.
GENERAL SERVICES ADMINISTRATION
Real Property Activities
FEDERAL BUILDINGS FUND
LIMITATIONS ON AVAILABILITY OF REVENUE
(INCLUDING TRANSFER OF FUNDS)
The conference agreement provides $5,550,000,000, for the
Federal Buildings Fund, instead of $7,700,000,000 as proposed
by the House and $5,548,000,000 as proposed by the Senate. Of
the amounts provided, the conference agreement includes
$750,000,000 for Federal buildings and United States
courthouses, $450,000,000 of which shall be for a new
headquarters for the Department of Homeland Security;
$300,000,000 for border stations and land ports of entry; and
not less than $4,500,000,000 to convert GSA facilities to
High-Performance Green buildings as defined in P.L. 110-140.
The conference agreement provides $4,000,000 for the Office
of Federal High-Performance Green Buildings, authorized in
the Energy Independence and Security Act of 2007. The
agreement also provides $3,000,000 for a training and
apprenticeship program for construction, repair and
alteration of Federal buildings. With any funds in the Act
that are used for new United States courthouse construction,
the conferees advise GSA to consider projects for which the
design provides courtroom space for senior judges for up to
10 years from eligibility for senior status, not to exceed
one courtroom for every two senior judges.
Energy-Efficient Federal Motor Vehicle Fleet Procurement
The conference agreement includes $300,000,000 for the
acquisition of motor vehicles for the Federal fleet as
proposed by the Senate, instead of $600,000,000 as proposed
by the House. The conferees expect that the funds provided
for Federal motor vehicle fleet procurement will help to
stimulate the market for high-efficiency motor vehicles and
will increase the fuel efficiency and reduce carbon emissions
of the Federal motor vehicle fleet. The conferees remain
hopeful that domestically produced plug-in hybrid-electric
vehicles will be commercially available in sufficient
quantities before September 30, 2010, such that these funds
could be used to acquire this technology for the Federal
fleet. Vehicles must be replaced on at least a one-for-one
basis. Each vehicle purchased must have a higher fuel
economy, as measured by EPA, than the vehicle being replaced
and the overall government-purchased vehicles must have an
improved fuel economy at least 10 percent greater than the
vehicles being replaced.
Office of Inspector General
The conference agreement provides $7,000,000 for the
General Services Administration Office of Inspector General,
as proposed by the Senate, instead of $15,000,000 as proposed
by the House. Funds are available through September 30, 2013
for oversight and audit of programs, activities, and projects
under this title.
Recovery Act Accountability and Transparency Board
The conference agreement provides $84,000,000 for the
Recovery Act Accountability and Transparency Board, instead
of $14,000,000 as provided by the House and $7,000,000 as
provided by the Senate. Funding will support activities
related to accountability, transparency, and oversight of
spending under the Act. Funds may be transferred to support
the operations of the Recovery Independent Advisory Panel
established under section 1541 of the Act and for technical
and administrative services and support provided by the
General Services Administration. Funds may also be
transferred to the Office of Management and Budget for
coordinating and overseeing the implementation of the
reporting requirements established under section 1526 of the
Act. Funds may be transferred not less than 15 days following
the notification of such transfer to the Committees on
Appropriations of the House of Representatives and the
Senate.
SMALL BUSINESS ADMINISTRATION
SALARIES AND EXPENSES
The conference agreement provides $69,000,000 for Salaries
and Expenses of the Small Business Administration, instead of
$84,000,000 as proposed by the Senate. The House did not
include funds for this account. Of the amount provided,
$24,000,000 is for marketing, management, and technical
assistance under the Microloan program, $20,000,000 is for
improving, streamlining, and automating information
technology systems related to lender processes and lender
oversight, and $25,000,000 is for administrative expenses to
ensure the efficient and effective management of small
business programs.
Office of Inspector General
The conference agreement provides $10,000,000 for the
Office of Inspector General, as proposed by the House and the
Senate. Funds are made available through September 30, 2013
for oversight and audit of programs, activities, and projects
under this title.
Surety Bond Guarantees Revolving Fund
The conference agreement provides $15,000,000 for the
Surety Bond Guarantees Revolving Fund, as proposed by the
Senate. The House did not include funds for this account.
Business Loans Program Account
The conference agreement provides $636,000,000 for the
Business Loans Program Account, instead of $430,000,000 as
proposed by the House and $621,000,000 as proposed by the
Senate. Of this amount, $6,000,000 is for the cost of direct
loans provided under the Microloan program. The remaining
$630,000,000 will implement the fee reductions and new loan
guarantee authorities under sections 501 and 506 of this
title.
Administrative Provisions--Small Business Administration
Section 501 authorizes temporary fee reductions or
eliminations in the 7(a) loan guarantee program and the 504
loan program. The Senate proposed similar language.
Section 502 authorizes up to a 90 percent Small Business
Administration guarantee on 7(a) loans. The House proposed
similar language.
Section 503 authorizes the establishment of a SBA Secondary
Market Guarantee Authority to provide a Federal guarantee for
pools of first lien 504 loans that are to be sold to third-
party investors. The House proposed similar language.
Section 504 authorizes SBA to refinance community
development loans under its 504 program and revises the job
creation goals of the program. The House and the Senate
proposed similar language.
Section 505 simplifies the maximum leverage limits and
aggregate investment limits required of Small Business
Investment Companies. The House and the Senate proposed
similar language.
[[Page H1419]]
Section 506 authorizes the Small Business Administration to
carry out a program to provide loans on a deferred basis to
viable small business concerns that have a qualifying small
business loan and are experiencing immediate financial
hardship.
Section 507 requires the Government Accountability Office
to report to Congress on the implementation of the Small
Business Administration provisions. The House proposed a
similar provision.
Section 508 provides an increase in the surety bond maximum
amount and modifies size standards. The Senate proposed
similar language.
Section 509 establishes a secondary market lending
authority within the Small Business Administration. The House
proposed similar language.
The conference agreement does not include a provision,
proposed by the House, to establish a new lending and
refinancing authority within the Small Business
Administration.
The conference agreement does not include a provision,
proposed by the Senate, regarding the 7(a) loan maximum
amount.
The conference agreement does not include a provision,
proposed by the Senate, regarding definitions under the
heading ``Small Business Administration'' in this title. The
conference agreement includes provisions relating to
definitions of terms within the individual sections.
TITLE VI--DEPARTMENT OF HOMELAND SECURITY
Office of the Under Secretary for Management
The conferees provide $200,000,000 for the Office of the
Under Secretary for Management instead of $198,000,000 as
proposed by the Senate and no funding proposed by the House.
These funds are for planning, design, and construction costs
necessary to consolidate the Department of Homeland Security
(DHS) headquarters. DHS estimates that this project will
create direct employment opportunities for 32,800 people in
the region, largely within the construction and renovation
industry. The conferees include bill language as proposed by
the Senate to require an expenditure plan.
Office of Inspector General
The conferees provide $5,000,000 for the Office of
Inspector General (OIG) as proposed by the Senate instead of
$2,000,000 as proposed by the House. Funding is available
until September 30, 2012. These funds shall be used for
oversight and audit programs, grants, and projects funded in
this Title. The OIG estimates that this funding will provide
for approximately 25 temporary federal positions and 40
contractor positions.
U.S. Customs and Border Protection
SALARIES AND EXPENSES
The conferees provide $160,000,000 for U.S. Customs and
Border Protection (CBP) Salaries and Expenses instead of
$100,000,000 as proposed by the House and $198,000,000 as
proposed by the Senate. This includes $100,000,000 for the
procurement and deployment of new or replacement non-
intrusive inspection (NII) systems, and $60,000,000 for
tactical communications. DHS estimates that funding for NII
systems will create 148 new government and private sector
jobs, and funding for tactical communications will create an
estimated 319 contract positions, as well as manufacturing
and systems software jobs. The conferees include bill
language as proposed by the Senate to require an expenditure
plan.
BORDER SECURITY FENCING, INFRASTRUCTURE, AND TECHNOLOGY
The conferees provide $100,000,000 for Border Security
Fencing, Infrastructure, and Technology instead of
$200,000,000 as proposed by the Senate and no funding
proposed by the House. The conferees include bill language as
proposed by the Senate to require an expenditure plan.
CONSTRUCTION
The conferees provide $420,000,000 for Construction,
instead of $150,000,000 as proposed by the House and
$800,000,000 as proposed by the Senate. The conferees include
bill language as proposed by the Senate to make funding
available for planning, management, design, alteration, and
construction of land ports of entry that are owned by U.S.
Customs and Border Protection. Up to five percent of these
funds may be used to enhance management and oversight of this
construction. DHS estimates that this project will create
employment for 4,584 people in the border communities,
largely within the construction and renovation industry. The
conferees include bill language as proposed by the Senate to
require an expenditure plan.
U.S. Immigration and Customs Enforcement
AUTOMATION MODERNIZATION
The conferees provide $20,000,000 for Automation
Modernization instead of $27,800,000 as proposed by the
Senate and no funding proposed by the House. U.S. Immigration
and Customs Enforcement has estimated this investment will
create more than 120 new jobs related to the planning,
manufacture, programming and installation of this equipment.
The conferees include bill language as proposed by the Senate
to require an expenditure plan.
Transportation Security Administration
AVIATION SECURITY
The conferees provide $1,000,000,000 for Aviation Security
as proposed by the Senate instead of $500,000,000 as proposed
by the House. This funding shall be used to procure and
install checked baggage explosives detection systems and
checkpoint explosives detection equipment. The Assistant
Secretary of the Transportation Security Administration (TSA)
should prioritize the award of these funds based on risk to
accelerate the installation at locations with completed
design plans. Funds must be competitively awarded. TSA
estimates that this funding will create about 3,537
manufacturing and construction jobs as well as a small number
of Federal positions.
The conferees include bill language as proposed by the
Senate to require an expenditure plan. Consistent with
direction provided previously for fiscal year 2009, if a new
requirement occurs after the expenditure plan is submitted,
TSA shall reassess and reallocate these funds after notifying
the Committees on Appropriations. In addition, TSA shall
brief the Committees quarterly on these expenditures.
Coast Guard
Acquisition, Construction, and Improvements
The conferees provide $98,000,000 for Acquisition,
Construction, and Improvements instead of $450,000,000 as
proposed by the Senate and no funding proposed by the House.
This funding cannot be used for pre-acquisition survey,
design, or construction of a new polar icebreaker. The
conferees include bill language as proposed by the Senate to
require an expenditure plan. The Coast Guard estimates that
this funding will create or preserve at least 435 jobs.
ALTERATION OF BRIDGES
The conferees provide $142,000,000 for Alteration of
Bridges instead of $150,000,000 as proposed by the House and
$240,400,000 as proposed by the Senate. The conferees include
bill language as proposed by the Senate to require an
expenditure plan. The Coast Guard estimates that this funding
will create approximately 1,200 jobs.
Federal Emergency Management Agency
STATE AND LOCAL PROGRAMS
The conferees provide $300,000,000 for State and Local
Programs instead of $950,000,000 as proposed by the Senate
and no funding proposed by the House. Of the amount made
available, $150,000,000 is for Public Transportation Security
Assistance and Railroad Security Assistance, including Amtrak
security, and $150,000,000 is for Port Security Grants. The
Secretary shall not require a cost share for grants provided
for Public Transportation Security Assistance and Railroad
Security Assistance (including Amtrak security). In addition,
the bill includes a provision waiving the cost-share for Port
Security Grants funded in this Act.
The conferees expect funding provided under this heading to
support nearly 2,900 jobs based on an estimate by the
Department of Homeland Security. The conferees direct that
priority be given to construction projects which address the
most significant risks and can also be completed in a timely
fashion.
FIREFIGHTER ASSISTANCE GRANTS
The conferees provide $210,000,000 for firefighter
assistance grants instead of $500,000,000 as proposed by the
Senate and no funding proposed by the House. As proposed by
the Senate, funds are provided for modifying, upgrading or
constructing non-Federal fire stations, not to exceed
$15,000,000 per grant. The conferees expect this funding to
support nearly 2,000 jobs based on an estimate by the
Department of Homeland Security.
DISASTER ASSISTANCE DIRECT LOAN PROGRAM ACCOUNT
The conferees include bill language as proposed by the
Senate allowing loans related to calendar year 2008 disasters
to exceed $5,000,000 and equal not more than 50 percent of
the operating budget of local governments if that local
government has suffered a loss of 25 percent or more in tax
revenues. The House bill contained no comparable provision.
EMERGENCY FOOD AND SHELTER
The conferees provide $100,000,000 for Emergency Food and
Shelter as proposed by the Senate instead of $200,000,000 as
proposed by the House.
GENERAL PROVISIONS--THIS TITLE
Section 601. The conferees include a provision, as proposed
by the Senate, related to Hurricanes Katrina and Rita
establishing an arbitration panel under the Federal Emergency
Management Agency.
Section 602. The conferees include a provision, as proposed
by the Senate, regarding the Federal Emergency Management
Agency's hazard mitigation grant program related to
Hurricanes Katrina and Rita.
Section 603. The conferees include a provision, as proposed
by the House, waiving the cost-share for grants under section
34 of the Federal Fire Prevention and Control Act of 1974 for
fiscal years 2009 and 2010.
Section 604. The conferees include and modify a provision,
as proposed by the House, related to the procurement of
apparel and textile products by the Department of Homeland
Security. This language is modeled after the Berry Amendment
(10 U.S.C. 2533a), which has required the Department of
Defense to purchase domestically-manufactured textiles and
apparel.
PROVISIONS NOT ADOPTED
The conferees do not include section 1114 of the House
bill, which relates to the E-Verify
[[Page H1420]]
program; and sections 7001 through 7004 of the House bill,
which House relate to authorization of the Basic Pilot
system.
TITLE VII--DEPARTMENT OF THE INTERIOR, ENVIRONMENT, AND RELATED
AGENCIES
DEPARTMENT OF THE INTERIOR
Bureau of Land Management
MANAGEMENT OF LANDS AND RESOURCES
The conference agreement provides $125,000,000 for
management of lands and resources instead of $135,000,000
proposed by the Senate; there was no House proposal. The
conference agreement provides flexibility to the agency in
determining the allocation of this funding among various
program activities and sub-activities. The conferees
encourage that selection of individual projects be based on a
prioritization process which weighs the capacity of proposals
to create the largest number of jobs in the shortest period
of time and which creates lasting value for the American
public. While maximizing jobs, the Bureau should consider
projects on all Bureau managed lands including deferred
maintenance, abandoned mine and well site remediation, road
and trail maintenance, watershed improvement, and high
priority habitat restoration.
CONSTRUCTION
The conference agreement provides $180,000,000 for
construction as proposed by the Senate instead of
$325,000,000 proposed by the House. The conference agreement
provides flexibility to the agency in determining the
allocation of this funding among various program activities
and sub-activities. The conferees encourage that selection of
individual projects be based on a prioritization process
which weighs the capacity of proposals to create the largest
number of jobs in the shortest period of time and which
creates lasting value for the American public. While
maximizing jobs, the Bureau should consider priority road,
bridge, and trail repair or decommissioning, critical
deferred maintenance projects, facilities construction and
renovation, and remediation of abandoned mine and well sites
on all Bureau managed lands.
WILDLAND FIRE MANAGEMENT
The conference agreement provides $15,000,000 for wildland
fire management as proposed by the Senate; there was no House
proposal. The funds should be used for high priority
hazardous fuels reduction projects on Federal lands.
United States Fish and Wildlife Service
RESOURCE MANAGEMENT
The conference agreement provides $165,000,000 for resource
management, as proposed by the Senate; there was no House
proposal for this account. The conference agreement provides
flexibility to the agency in determining the allocation of
this funding among various program activities and sub-
activities. The conferees encourage that selection of
individual projects be based on a prioritization process
which weighs the capacity of proposals to create the largest
number of jobs in the shortest period of time and which
creates lasting value for the American public. While
maximizing jobs, the Service should consider priority
critical deferred maintenance and capital improvement
projects, trail maintenance, and habitat restoration on
National Wildlife Refuges, National Fish Hatcheries, and
other Service properties.
CONSTRUCTION
The conference agreement provides $115,000,000 for
construction instead of $110,000,000 as proposed by the
Senate and $300,000,000 as proposed by the House. The
conference agreement provides flexibility to the agency in
determining the allocation of this funding among various
program activities and sub-activities. The conferees
encourage that selection of individual projects be based on a
prioritization process which weighs the capacity of proposals
to create the largest number of jobs in the shortest period
of time and which creates lasting value for the American
public. While maximizing jobs, the Service should consider
priority construction, reconstruction and repair, critical
deferred maintenance and capital improvement projects, road
maintenance, energy conservation projects and habitat
restoration on National Wildlife Refuges, National Fish
Hatcheries and other Service properties.
National Park Service
OPERATION OF THE NATIONAL PARK SYSTEM
Appropriates $146,000,000 for operation of the national
park system instead of $158,000,000, as proposed by the
Senate. The House bill included all National Park Service
funding under the construction account. Eligible projects to
be funded within this account include but are not limited to
repair and rehabilitation of facilities and other
infrastructure, trail maintenance projects and other critical
infrastructure needs. The conference agreement provides
flexibility to the agency in determining the allocation of
this funding among various program activities and sub-
activities. The conferees encourage that selection of
individual projects by the National Park Service be based on
a prioritization process which weighs the capacity of
proposals to create the largest number of jobs in the
shortest period of time and which creates lasting value for
the Park System and its visitors.
CENTENNIAL CHALLENGE
No funds are included for the Centennial Challenge program
in the conference agreement. The House bill included
$100,000,000 for this program. No funding was included by the
Senate.
HISTORIC PRESERVATION FUND
$15,000,000 has been included for historic preservation
grants for historically black colleges and universities as
authorized by the Historic Preservation Fund Act, as amended.
Projects will be selected competitively but the agreement
waives matching requirements for grants made with these
funds. The House bill included $15,000,000 for this activity
under the ``Construction'' account. The Senate bill did not
fund this program.
CONSTRUCTION
Appropriates $589,000,000 for Construction as proposed by
the Senate instead of $1,700,000,000 as proposed by the
House. Eligible projects include but are not limited to major
facility construction, road maintenance, abandoned mine
cleanup, equipment replacement, and preservation and
rehabilitation of historic assets. The conference agreement
provides flexibility to the agency in determining the
allocation of this funding among various program activities
and sub-activities. The conferees encourage that selection of
individual projects by the National Park Service be based on
a prioritization process which weighs the capacity of
proposals to create the largest number of jobs in the
shortest period of time and which creates lasting value for
the Park System and its visitors. Funding for historically
black colleges and universities has been provided under the
Historic Preservation Fund account.
United States Geological Survey
SURVEYS, INVESTIGATIONS, AND RESEARCH
The conference agreement provides $140,000,000 for Surveys,
Investigations and Research instead of $135,000,000 proposed
by the Senate and $200,000,000 proposed by the House. The
Survey should consider a wide variety of activities,
including repair, construction and restoration of facilities;
equipment replacement and upgrades including stream gages,
seismic and volcano monitoring systems; national map
activities; and other critical deferred maintenance and
improvement projects which can maximize jobs and provide
lasting improvement to our Nation's science capacity.
Bureau of Indian Affairs
OPERATION OF INDIAN PROGRAMS
The conference agreement includes $40,000,000 for the
operation of Indian programs as proposed by the Senate; there
was no House proposal for this account. While maximizing
jobs, the Bureau should fund workforce development and
training programs and the housing improvement program.
CONSTRUCTION
The conference agreement provides $450,000,000 for
construction instead of $522,000,000 as proposed by the
Senate and $500,000,000 as proposed by the House. The
conference agreement provides flexibility to the agency in
determining the allocation of this funding among various
program activities and sub-activities. The conferees
encourage that selection of individual projects be based on a
prioritization process which weighs the capacity of proposals
to create the largest number of jobs in the shortest period
of time and which creates lasting value for the American
public. While maximizing jobs, the Bureau should consider
priority critical facility improvement and repair, repair and
restoration of roads, school replacement, school improvement
and repair and detention center maintenance and repair.
INDIAN GUARANTEED LOAN PROGRAM
The conference agreement includes $10,000,000 for
construction as proposed by the Senate; there was no House
proposal for this account.
Departmental Offices
INSULAR AFFAIRS
ASSISTANCE TO TERRITORIES
The conference agreement provides no funding for Assistance
to Territories as proposed by the House instead of
$62,000,000 proposed the Senate. The managers note that the
territories receive funding under many of the infrastructure
programs elsewhere in this bill.
Office of Inspector General
SALARIES AND EXPENSES
The conference agreement provides $15,000,000 for the
Office of Inspector General as proposed by the Senate in this
title and as proposed by the House as part of Title I,
section 1107. In order to provide adequate oversight of the
Department of the Interior, these funds are available through
September 30, 2012.
Department-Wide Programs
CENTRAL HAZARDOUS MATERIALS FUND
The conference agreement does not provide funding for the
central hazardous materials fund as proposed by the House
instead of $20,000,000 proposed by the Senate.
Environmental Protection Agency
The amended bill includes $7,220,000,000 for the
Environmental Protection Agency instead of $9,420,000,000 as
proposed by the House and $7,200,000,000 as proposed by the
Senate. For each account, the amended bill includes
provisions to fund the Agency's program oversight and
management costs. The Conferees have included an
Administrative Provision which makes available until
September 30, 2011 the funds provided for Agency
[[Page H1421]]
program management and oversight and allows funds
appropriated in the State and Tribal Assistance Grants
account for that purpose to be transferred to the
Environmental Programs and Management account, as needed.
OFFICE OF INSPECTOR GENERAL
The amended bill provides $20,000,000 for the Office of
Inspector General account, as proposed by the House and
instead of unspecified amounts included in each
administrative set aside by the Senate. These funds are
available until September 30, 2012.
HAZARDOUS SUBSTANCE SUPERFUND
The amended bill provides $600,000,000 for the Hazardous
Substance Superfund as proposed by the Senate and instead of
$800,000,000 as proposed by the House. The funds are limited
to the Superfund Remedial program, as proposed by the House.
The bill allows the Administrator to retain up to 3 percent
of the funds for program management and oversight. The
Administrator is directed to coordinate oversight activities
with the Inspector General.
LEAKING UNDERGROUND STORAGE TANK TRUST FUND PROGRAM
The amended bill provides $200,000,000 for the Leaking
Underground Storage Tank Trust Fund Account as proposed by
both the House and the Senate. The funds are provided for
clean up of leaking underground storage tanks as authorized
by section 9003(h) of the Solid Waste Disposal Act. The bill
allows the Administrator to retain up to 1.5 percent of the
funds for program management and oversight. To expedite use
of these funds, the bill waives the state matching
requirements in section 9003(h)(7)(B) of the Solid Waste
Disposal Act.
STATE AND TRIBAL ASSISTANCE GRANTS
(INCLUDING TRANSFERS OF FUNDS)
The amended bill provides $6,400,000,000 for the State and
Tribal Assistance Grants account as proposed by the Senate
and instead of $8,400,000,000 as proposed by the House. The
amended bill includes the following program funding levels
and directives:
Clean Water and Drinking Water State Revolving Funds: The
amended bill provides $4,000,000,000 for the Clean Water
State Revolving Funds and $2,000,000,000 for the Drinking
Water State Revolving Funds. To provide for the Agency's
management and oversight of these programs, the bill allows
the Administrator to retain up to 1 percent of the combined
total provided for the Revolving Funds and provides transfer
authority to the Environmental Programs and Management
account as needed. To expedite use of the funds, the bill
waives the mandatory 20 percent State and District of
Columbia matching requirements for both Revolving Funds.
To ensure that the funds appropriated herein for the
Revolving Funds are used expeditiously to create jobs, the
Conferees have included two important provisions. First, the
Administrator is directed to reallocate Revolving Fund monies
where projects are not under contract or construction within
12 months of the date of enactment. Second, bill language
directs priority funding to projects on State priority lists
that are ready to proceed to construction within 12 months of
enactment.
The bill includes language to require that not less than 50
percent of the capitalization grants each State receives be
used to provide assistance for additional subsidization in
the form of forgiveness of principal, negative interest
loans, or grants, or any combination of these. This provision
provides relief to communities by requiring a greater Federal
share for local clean and drinking water projects and
provides flexibility for States to reach communities that
would otherwise not have the resources to repay a loan with
interest. The Conferees expect EPA to strongly encourage the
States to maximize the use of additional subsidies and to
work with the States to ensure expedited award of grants
under the additional subsidy provisions. The Conferees also
expect the States to continue implementation of their base
loan programs funded through the annual appropriations bill.
The bill does not include language proposed by the House that
would require a specific amount for communities that meet
affordability criteria set by the Governor. However, the
Conferees expect the States to target, as much as possible,
the additional subsidized monies to communities that could
not otherwise afford an SRF loan.
The bill requires not less than 20 percent of each
Revolving Fund be available for projects to address to green
infrastructure, water and/or energy efficiency, innovative
water quality improvements, decentralized wastewater
treatment, stormwater runoff mitigation, and water
conservation. The bill allows States to use less than 20
percent for these types of projects only if the States lack
sufficient applications. Further, the States must certify to
the Agency that they lack sufficient, eligible applications
for these types of projects prior to using funds for
conventional projects.
Consistent with the annual appropriations bill, the
Conferees have increased the tribal set-aside from the Clean
Water State Revolving Funds to up to 1.5 percent of the total
amount appropriated. Language has also been included to allow
EPA to transfer to the Indian Health Service up to 4 percent
of the tribal set-aside amount in each Revolving Fund for
administration and management of the projects in Indian
country. This amount is consistent with the amount allowed by
law for the States to manage their capitalization grants.
Language also has been included to prohibit the use of both
Revolving Funds for the purchase of land or easements and to
prohibit other set asides under section 1452(k) of the Safe
Drinking Water Act that do not directly create jobs. To
ensure that funds are used to create jobs, the bill also
limits the use of the Revolving Funds to buy, refinance or
restructure debt incurred prior to October 1, 2008.
Brownfields Projects: The amended bill provides
$100,000,000 for Brownfields projects, as proposed by the
both House and the Senate. The funds are provided to
implement section 104(k) of the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA), as
proposed by the House. The bill allows the Administrator to
retain up to 3.5 percent of the funds for program management
and oversight, with transfer authority to the Environmental
Programs and Management account as needed. Bill language also
waives the cost share requirements under section
104(k)(9)(B)(iii) of CERCLA.
Diesel Emission Reduction Act (DERA) Grants: The amended
bill provides $300,000,000 for DERA grants as proposed by
both the House and the Senate. The bill allows the
Administrator to retain up to 2 percent of the funds for
program management and oversight, with transfer authority to
the Environmental Programs and Management account as needed.
The amended bill does not include language proposed by the
Senate to waive the statutory limitation on State funds.
Instead, the Conferees have included language to waive the
State Grant and Loan Program matching incentive provisions of
DERA. The Conferees expect the DERA funds provided here to be
used on projects that spur job creation, while achieving
direct, measurable reductions in diesel emissions.
Competitive Grants: The Conferees expect the Agency to
award both the Brownfields and DERA funds in an expeditious
manner, consistent with fair and open competition. To ensure
the additional goal of creating jobs as quickly as possible,
the Agency may make awards for meritorious and quality
proposals submitted under competitions that were initiated
within the past 18 months.
ADMINISTRATIVE PROVISIONS, ENVIRONMENTAL PROTECTION AGENCY
(INCLUDING TRANSFERS OF FUNDS)
The amended bill includes language that makes set-asides
for program management and oversight available through
September 30, 2011. It also allows the funds provided for
this purpose in the State and Tribal Assistance Grants
account to be transferred to the Environmental Programs and
Management account, as needed.
DEPARTMENT OF AGRICULTURE
Forest Service
CAPITAL IMPROVEMENT AND MAINTENANCE
The conference agreement provides $650,000,000 for Capital
Improvement and Maintenance as proposed by both the House and
the Senate. The conference agreement provides flexibility to
the agency in determining the allocation of this funding
among various program activities and sub-activities. The
conferees encourage that selection of individual projects be
based on a prioritization process which weighs the capacity
of proposals to create the largest number of jobs in the
shortest period of time and which creates lasting value for
the American public. While maximizing jobs, the Service
should consider projects involving reconstruction, capital
improvement, decommissioning, and maintenance of forest
roads, bridges and trails; alternative energy technologies,
and deferred maintenance at Federal facilities; and
remediation of abandoned mine sites, and other related
critical habitat, forest improvement and watershed
enhancement projects.
WILDLAND FIRE MANAGEMENT
The conference agreement provides $500,000,000 for Wildland
Fire Management instead of $485,000,000 proposed by the
Senate and $850,000,000 proposed by the House. This includes
$250,000,000 for hazardous fuels reduction, forest health
protection, rehabilitation and hazard mitigation activities
on Federal lands and $250,000,000 for cooperative activities
to benefit State and private lands. The conference agreement
provides flexibility to the Service to allocate funds among
existing State and private assistance programs to choose
programs that provide the maximum public benefit. The
Conferees encourage the Service to select individual projects
based on a prioritization process which weighs the capacity
of proposals to create the largest number of jobs in the
shortest period of time and to create lasting value for the
American public. The bill allows the Service to use up to
$50,000,000 to make competitive grants for the purpose of
creating incentives for increased use of biomass from federal
and non-federal forested lands. To better address current
economic conditions at the state and local level, funds
provided for State and private forestry activities shall not
be subject to matching or cost share requirements.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Indian Health Service
INDIAN HEALTH SERVICES
The conference agreement includes $85,000,000 for Indian
Health Services instead of $135,000,000 as proposed by the
Senate; the House had no proposal for this account. The
[[Page H1422]]
funding is for Health Information Technology for
infrastructure development and deployment.
INDIAN HEALTH FACILITIES
The conference agreement includes $415,000,000 for Indian
Health Facilities instead of $410,000,000 as proposed by the
Senate and $550,000,000 as proposed by the House. Within this
amount, $100,000,000 is for maintenance and improvement,
$68,000,000 is for sanitation facilities construction,
$227,000,000 is for health care facilities construction, and
$20,000,000 is for equipment.
The Indian Health Service is directed to use the funding
provided for health care facilities construction to complete
ongoing high priority facilities construction projects.
The agreement includes language proposed by the Senate that
exempts the funds provided in this bill for the purchase of
medical equipment from spending caps carried in the annual
appropriation bill in order to provide the maximum
flexibility to the Service in meeting the highest priority
needs of the tribes.
Funds are provided for the Department of Health and Human
Services (HHS) under title VIII (Labor, Health and Human
Services, and Education) of this Act for the purpose of
providing oversight capability over all HHS programs,
including the Indian Health Service.
OTHER RELATED AGENCIES
Smithsonian Institution
FACILITIES CAPITAL
$25,000,000 is included in the bill for the Smithsonian
Institution. The House bill included $150,000,000 for the
Smithsonian and the Senate bill included $75,000,000.
NATIONAL FOUNDATION ON THE ARTS AND HUMANITIES
National Endowment for the Arts
GRANTS AND ADMINISTRATION
The conference agreement includes a total of $50,000,000
for the National Endowment for the Arts as proposed by the
House. No funds were included in the Senate bill for this
purpose.
GENERAL PROVISIONS--TITLE VII
Interior, Environment and Related Agencies
Sec. 701. The agreement includes language proposed by the
Senate requiring that agencies receiving funding in the
Interior and Environment sections of this Act submit a
general spending plan for these appropriations to the
Committees on Appropriations within 30 days of enactment and
that they submit detailed project level information within 90
days of enactment. The Conferees further direct that the
agencies submit bi-annual progress reports on implementation
of the provisions of this Act under their jurisdiction.
Sec. 702. Modifies language proposed by the Senate
requiring that the Secretaries of Interior and Agriculture
utilize the Public Lands Corps, the Youth Conservation Corps,
the Job Corps and the Student Conservation Corps where
practicable. The House bill did not include a similar
provision.
Sec. 703. Includes a new general provision not included in
either the House or Senate bills providing limited transfer
authority to move not to exceed 10 percent of funds from one
appropriation to another if such move will increase the
number of jobs created or the speed with which projects can
be undertaken. Transfers are limited to accounts within a
particular agency.
Administrative and support costs: The Conferees have agreed
that, except where otherwise provided in the bill or this
accompanying statement, amounts for administrative and
support costs associated with the implementation of title VII
activities of this Act shall not exceed five percent of any
specific appropriation. The conferees note that this amount
is a cap and encourage agencies to balance carefully the goal
of proper management and fiscal prudence when setting funding
levels for administrative support. In staffing up to handle
the increased, but temporary, workloads associated with
funding provided in the bill, it is important that the
agencies limit the permanent expansion of their workforces
and utilize temporary, term or contract personnel as much as
possible.
TITLE VIII--DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND
EDUCATION, AND RELATED AGENCIES
DEPARTMENT OF LABOR
EMPLOYMENT AND TRAINING ADMINISTRATION
TRAINING AND EMPLOYMENT SERVICES
The conference agreement includes $3,950,000,000 for
Workforce Investment Act programs, instead of $4,000,000,000
as proposed by the House and $3,250,000,000 as proposed by
the Senate.
Within this amount, $2,950,000,000 is provided for formula
grants to the States for training and employment services.
These funds are to be allotted to States within 30 days of
enactment. Since these funds will be made available during
program year 2008, they shall remain available to the States
only as long as the other funds allotted in that program
year.<greek-m><greek-m>The conferees intend for these funds
to be spent quickly and effectively. To facilitate increased
training of individuals for high-demand occupations, the
conference agreement modifies language proposed by the Senate
to provide the authority for local workforce investment
boards to contract with institutions of higher education and
other eligible training providers as long as that authority
is not used to limit customer choice.
Within the State formula grant programs, $500,000,000 is
provided for services for adults. The conference agreement
includes language proposed by the Senate to ensure that
supportive services and needs-related payments are available
to support the employment and training needs of priority
populations, including recipients of public assistance and
other low-income individuals.
For youth services, $1,200,000,000 is provided. The
conferees are particularly interested in these funds being
used to create summer employment opportunities for youth and
language applying the work readiness performance indicator to
such summer jobs is included as an appropriate measure for
those activities. Year-round youth activities are also
envisioned and the age of eligibility for youth services
provided with the additional funds is extended through age 24
to allow local programs to reach young adults who have become
disconnected from both education and the labor market.
For dislocated worker services $1,250,000,000 is provided.
The conferees urge the Secretary to provide guidance on how
States and local workforce areas can establish policies that
assure that supportive services and needs-related payments
that may be necessary for an individual's participation in
job training are a part of the dislocated worker service
strategy.
The conferees believe that the Department should integrate
reporting on the expenditure of these additional formula
funds into its regular reporting system, including the
provision of needs-related payments and supportive services,
the number of individuals from priority service populations
participating in employment and training activities, and the
number of youth engaged in summer employment programs. The
conferees strongly urge the Department to establish
appropriate procedures for monitoring the execution of
priority of service provisions.
The conference agreement also includes $200,000,000 for the
dislocated worker assistance national reserve, as proposed by
the Senate, instead of $500,000,000 as proposed by the House.
These funds will allow the Secretary of Labor to award
national emergency grants to respond to plant closings, mass
layoffs and other worker dislocations. The funds in the
national reserve are also available for dislocated worker
activities for the outlying areas, consistent with the
provisions of the Workforce Investment Act.
The conference agreement includes $50,000,000 for the
YouthBuild program, as proposed by the House, instead of
$100,000,000 as proposed by the Senate. These funds will
allow for expanded services for at-risk youth, who gain
education and occupational credentials while constructing or
rehabilitating affordable housing. The conference agreement
includes language to allow YouthBuild grantees to serve
individuals who have dropped out of school and reenrolled in
an alternative school, if that reenrollment is part of a
sequential service strategy.
The conference agreement includes $750,000,000 for a
program of competitive grants for worker training and
placement in high growth and emerging industry sectors, as
proposed by the House, rather than $250,000,000 for a similar
program proposed by the Senate. Within the amount provided,
$500,000,000 is designated for projects that prepare workers
for careers in energy efficiency and renewable energy as
described in the Green Jobs Act of 2007. Priority
consideration for the balance of funds shall be given to
projects that prepare workers for careers in the health care
sector, which continues to grow despite the economic
downturn. The conferees believe that training for wireless
and broadband deployment is an eligible activity for grants
for high growth and emerging industry sectors, along with
advanced manufacturing and other high demand industry sectors
identified by local workforce areas. In carrying out the
program of competitive grants for worker training and
placement in high growth and emerging industry sectors, the
conferees expect the Department to use a limited portion of
the program funds for technical assistance and related
research.
COMMUNITY SERVICE EMPLOYMENT FOR OLDER AMERICANS
The conference agreement includes $120,000,000 for the
Community Service Employment for Older Americans program, as
proposed by both the House and the Senate. The economic
recovery funds are to be distributed to current grantees to
support additional employment opportunities for low income
seniors. The wages paid to these low-income seniors will
provide a direct stimulus to the economies of local
communities, which will also benefit from the community
service work performed by participants. The conference
agreement includes language to allow for the recapture and
reobligation of such funds, as proposed by the Senate and as
authorized under Title V of the Older Americans Act.
STATE UNEMPLOYMENT INSURANCE AND EMPLOYMENT SERVICE OPERATIONS
The conference agreement includes $400,000,000, as proposed
by the Senate, instead of $500,000,000 as proposed by the
House. Within this amount, $250,000,000 is designated for
reemployment services to connect unemployment insurance
claimants to employment and training opportunities that will
facilitate their reentry to employment. The funds provided
will be distributed
[[Page H1423]]
by the existing Wagner-Peyser formula, as proposed by the
Senate, rather than under an alternative formula proposed by
the House.
Departmental Management
SALARIES AND EXPENSES
(INCLUDING TRANSFER OF FUNDS)
The conference agreement includes $80,000,000 within the
Departmental Management account for worker protection,
oversight, and coordination activities, as proposed by the
House. The Senate provided funds for this and other purposes
through a set-aside of funds available to the Department
rather than through a direct appropriation. The conference
agreement modifies language providing the Secretary of Labor
with the ability to transfer such funds to a number of
Department of Labor agencies which have responsibility for
enforcement of worker protection laws that apply to the
infrastructure investments in this economic recovery bill,
and for oversight and coordination of recovery activities,
including those provided for unemployment insurance.
OFFICE OF JOB CORPS
The conference agreement includes $250,000,000 for the
Office of Job Corps, rather than $300,000,000 as proposed by
the House and $160,000,000 as proposed by the Senate. The
funds will support construction and modernization of a
network of residential facilities serving at-risk youth. The
funds will allow the Office of Job Corps to move forward on a
number of ready-to-go rehabilitation and construction
projects, including those where competitions have already
been concluded. The conference agreement modifies language
proposed by the House to allow funds to be used in support of
multi-year arrangements where such arrangement will result in
construction that can commence within 120 days of enactment.
A portion of the funds are available for the operational
needs of the Job Corps program, including activities to
provide additional training for careers in the energy
efficiency, renewable energy, and environmental protection
industries.
OFFICE OF INSPECTOR GENERAL
The conference agreement includes $6,000,000 for the
Department of Labor Office of Inspector General, as proposed
by the House, rather than $3,000,000 as proposed by the
Senate. These funds will be available through September 30,
2012 to support oversight and audit of Department of Labor
programs, grants, and projects funded in this Act.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Resources and Services Administration
HEALTH RESOURCES AND SERVICES
The conference agreement includes $2,500,000,000 for health
resources and services instead of $2,188,000,000 as proposed
by the House and $1,958,000,000 as proposed by the Senate.
The conference agreement includes $500,000,000 for services
provided at community health centers as proposed by the
House. The Senate did not provide similar funding. These
funds are to be used to support new sites and service areas,
to increase services at existing sites, and to provide
supplemental payments for spikes in uninsured populations.
Grants for new sites and service areas are to be two years in
length as startup is phased in. The conferees encourage the
Health Resources and Services Administration (HRSA) to
consider supporting currently unfunded but approved community
health center applications.
The agreement also includes $1,500,000,000 for
construction, renovation and equipment, and for the
acquisition of health information technology systems, for
community health centers, including health center controlled
networks receiving operating grants under section 330 of the
Public Health Service (``PHS'') Act, notwithstanding the
limitation in section 330(e)(3). The House proposed
$1,000,000,000 for this activity, while the Senate proposed
$1,870,000,000.
No funding is provided for a competitive lease procurement
to renovate or replace the headquarters building for the
Public Health Service. The House and Senate proposed
$88,000,000 for this purpose.
The conference agreement provides $500,000,000 for health
professions training programs instead of $600,000,000 as
proposed by the House. Within this total, $300,000,000 is
allocated for National Health Service Corps (NHSC)
recruitment and field activities, with $75,000,000 available
through September 30, 2011 for extending service contracts
and the recapture and reallocation of funds in the event that
a participant fails to fulfill his or her term of service.
Twenty percent of the NHSC funding shall be used for field
operations.
The remaining $200,000,000 is allocated for all the
disciplines trained through the primary care medicine and
dentistry program, the public health and preventive medicine
program, the scholarship and loan repayment programs
authorized in Title VII (Health Professions) and Title VIII
(Nurse Training) of the PHS Act, and grants to training
programs for equipment. Funds may also be used to foster
cross-State licensing agreements for healthcare specialists.
The conference agreement provides that up to 0.5 percent of
the funds provided in this account may be used for
administration. HRSA is required to provide an operating plan
to the Committees on Appropriations of the House of
Representatives and the Senate within 90 days of enactment of
this Act describing activities to be supported and timelines
for expenditure, as well as a report every six months on
actual obligations and expenditures.
Centers For Disease Control and Prevention
DISEASE CONTROL, RESEARCH, AND TRAINING
The conference agreement does not include funding for
building and facilities at the Centers for Disease Control
and Prevention (CDC). The House proposed $462,000,000 and the
Senate proposed $412,000,000 for this activity.
National Institutes of Health
The conference agreement provides $10,000,000,000 for the
National Institutes of Health (NIH) as proposed by the Senate
instead of $3,500,000,000 as proposed by the House. The
components of this total are as follows:
NATIONAL CENTER FOR RESEARCH RESOURCES
The conference agreement includes $1,300,000,000 for the
National Center for Research Resources (NCRR) instead of
$1,500,000,000 as proposed by the House and $300,000,000 as
proposed by the Senate. Bill language identifies
$1,000,000,000 of this total for competitive awards for the
construction and renovation of extramural research
facilities. The conference agreement also provides
$300,000,000 for the acquisition of shared instrumentation
and other capital research equipment. The conference
agreement includes bill language proposed by the House for
extramural facilities relating to waiver of non-Federal match
requirements, primate centers, and limitation on the term of
Federal interest. The conference agreement includes language
proposed by the House mandating several reporting
requirements on the use of the funds. The conferees expect
that NCRR will give priority to those applications that are
expected to generate demonstrable energy-saving or beneficial
environmental effects.
OFFICE OF THE DIRECTOR
(INCLUDING TRANSFER OF FUNDS)
The conference agreement provides $8,200,000,000 for the
Office of the Director instead of $1,500,000,000 as proposed
by the House and $9,200,000,000 as proposed by the Senate. Of
this amount, $7,400,000,000 is designated for transfer to
Institutes and Centers and to the Common Fund instead of
$7,850,000,000 as proposed by the Senate. The conference
agreement adopts the Senate guidance that, to the extent
possible, the $800,000,000 retained in the Office of the
Director shall be used for purposes that can be completed
within two years; priority shall be placed on short-term
grants that focus on specific scientific challenges, new
research that expands the scope of ongoing projects, and
research on public and international health priorities. Bill
language is included to permit the Director of NIH to use
$400,000,000 of the funds provided in this account for the
flexible research authority authorized in section 215 of
Division G of P.L. 110-161.
The funds available to NIH can be used to enhance central
research support activities, such as equipment for the
clinical center or intramural activities, centralized
information support systems, and other related activities as
determined by the Director. The conferees intend that NIH
take advantage of scientific opportunities using any funding
mechanisms and authorities at the agency's disposal that
maximize scientific and health benefit. The conferees include
bill language indicating that the funds provided in this Act
to NIH are not subject to Small Business Innovation Research
and Small Business Technology Transfer set-aside
requirements.
BUILDINGS AND FACILITIES
The conference agreement provides $500,000,000 for
Buildings and Facilities as proposed by the House and the
Senate. Bill language permits funding to be used for
construction as well as renovation, as proposed by the
Senate. The House language permitted only renovation. These
funds are to be used to construct, improve, and repair NIH
buildings and facilities, including projects identified in
the Master Plan for Building 10.
Agency For Healthcare Research and Quality
HEALTHCARE RESEARCH AND QUALITY
(INCLUDING TRANSFER OF FUNDS)
The conference agreement includes $1,100,000,000 for
comparative effectiveness research, which is the same level
as proposed by both the House and the Senate. The conference
agreement uses the term, ``comparative effectiveness
research'', as proposed by the House and deletes without
prejudice the term ``clinical'', which was included by the
Senate. Within the total, $300,000,000 shall be administered
by the Agency for Healthcare Research and Quality (AHRQ),
$400,000,000 shall be transferred to the National Institutes
of Health (NIH), and $400,000,000 shall be allocated at the
discretion of the Secretary of Health and Human Services.
The conferees do not intend for the comparative
effectiveness research funding included in the conference
agreement to be used to mandate coverage, reimbursement, or
other policies for any public or private payer. The funding
in the conference agreement shall be used to conduct or
support research to evaluate and compare the clinical
outcomes, effectiveness, risk, and benefits of two or more
medical treatments and services that address a particular
medical condition.
[[Page H1424]]
Further, the conferees recognize that a ``one-size-fits-all''
approach to patient treatment is not the most medically
appropriate solution to treating various conditions and
include language to ensure that subpopulations are considered
when research is conducted or supported with the funds
provided in the conference agreement.
Administration For Children And Families
LOW-INCOME HOME ENERGY ASSISTANCE
The conference agreement does not include funding for the
Low-Income Home Energy Assistance Program proposed by the
House. The Senate did not provide funding for this program.
PAYMENTS TO STATES FOR THE CHILD CARE AND DEVELOPMENT BLOCK GRANT
The conference agreement includes $2,000,000,000 for the
Child Care and Development Block Grant, as proposed by both
the House and Senate. The conference agreement adopts the
Senate language to make the entire amount available upon
enactment, instead of the House language to divide the amount
by fiscal year. The conference agreement also adopts the
Senate proposal to set aside $255,186,000 of these funds for
quality improvement activities, of which $93,587,000 shall be
for activities to improve the quality of infant and toddler
care.
SOCIAL SERVICES BLOCK GRANT
The conference agreement does not include funding for the
Social Services Block Grant proposed by the Senate. The House
did not provide funding for this program.
CHILDREN AND FAMILIES SERVICES PROGRAMS
The conference agreement includes $3,150,000,000 for
Children and Families Services Programs, instead of
$3,200,000,000 as proposed by the House and $1,250,000,000 as
proposed by the Senate. The conference agreement adopts the
Senate language to make the entire amount available upon
enactment, instead of the House language to divide the amount
by fiscal year.
Within the total provided for Children and Families
Services Programs, $1,000,000,000 is provided for Head Start,
as proposed by the House, instead of $500,000,000 as proposed
by the Senate. The Head Start funds shall be allocated
according to the current statutory formula. The conferees
expect the Department of Health and Human Services (HHS) to
work with Head Start grantees in order to manage these
resources in order to sustain fiscal year 2009 awards through
fiscal year 2010.
The conference agreement also provides $1,100,000,000 for
Early Head Start as proposed by the House, instead of
$550,000,000 as proposed by the Senate. These funds will be
awarded on a competitive basis. The conferees expect HHS to
manage these resources in order to sustain fiscal year 2009
awards through fiscal year 2010. The conferees intend for
regional and American Indian and Alaska Native Early Head
Start programs and Migrant and Seasonal Head Start programs
to benefit from the Early Head Start funds, taking into
consideration the needs of the communities served by such
programs. The conferees remind the Secretary of the authority
to temporarily increase or waive the limit on the Federal
share of a Head Start or Early Head Start grant under the
circumstances described in the authorizing statute and
support the Secretary's exercise of that authority where
appropriate.
Within the total provided for Children and Families
Services Programs, $1,000,000,000 is provided for the
Community Services Block Grant (CSBG), as proposed by the
House, instead of $200,000,000 as proposed by the Senate. The
conference agreement adopts the Senate language to make the
entire amount available upon enactment, instead of the House
language to divide the amount by fiscal year. The agreement
includes bill language requiring States to reserve 1 percent
of their allocation for benefit coordination services and to
distribute the remaining funds directly to local eligible
entities. It also permits States to increase the income
eligibility ceiling from 125 percent to 200 percent of the
Federal poverty level for services furnished under the CSBG
Act during fiscal years 2009 and 2010, as proposed by the
House. The Senate did not propose similar language.
Within the total provided for Children and Families
Services Programs, $50,000,000 is provided under section 1110
of the Social Security Act to establish a new initiative to
award capacity-building grants directly to nonprofit
organizations, instead of $100,000,000 for the Compassion
Capital Fund as proposed by the House. The Senate did not
propose funds for this purpose in this account. The conferees
intend that this program will expand the delivery of social
services to individuals and communities affected by the
economic downturn. The conferees expect that grantees have
clear and measurable goals, and must be able to evaluate the
success of their program.
Administration On Aging
AGING SERVICES PROGRAMS
The conference agreement includes $100,000,000 for senior
meals programs as proposed by the Senate, instead of
$200,000,000 as proposed by the House. Within this amount,
$65,000,000 is provided for Congregate Nutrition Services and
$32,000,000 is provided for Home-Delivered Nutrition Services
under Title III of the Older Americans Act of 1965, and
$3,000,000 is provided for Native American nutrition services
under Title VI of such Act. The conference agreement adopts
the Senate proposal that makes all of these funds available
upon enactment.
Office Of The Secretary
OFFICE OF THE NATIONAL COORDINATOR FOR HEALTH INFORMATION TECHNOLOGY
(INCLUDING TRANSFER OF FUNDS)
The conference agreement includes $2,000,000,000 for this
activity, as proposed by the House. The Senate provided
$3,000,000,000. The conferees include bill language creating
a 0.25 percent set-aside of the funds provided for the Office
of the National Coordinator for Health Information Technology
for management and oversight activities. The House proposed
similar language. Within the funds provided, the conferees
appropriate $300,000,000 to support regional or sub-national
efforts toward health information exchange. The conferees
include bill language proposed by the House regarding certain
operating plan requirements for the Office of the National
Coordinator.
OFFICE OF INSPECTOR GENERAL
The conference agreement includes $17,000,000 for the
Office of Inspector General instead of $19,000,000 as
proposed by both the House and Senate. These funds are
available until September 30, 2012 as proposed by the Senate
instead of September 30, 2013 as proposed by the House.
PUBLIC HEALTH AND SOCIAL SERVICES EMERGENCY FUND
The conference agreement includes $50,000,000 for the
Public Health and Social Services Emergency Fund (PHSSEF),
instead of $900,000,000 as proposed by the House. The Senate
did not propose funding for PHSSEF. Funding is provided to
improve information technology security at the Department of
Health and Human Services as proposed by the House--the
Senate did not propose funding for this activity. As proposed
by the Senate, the conference agreement does not include
funding for pandemic influenza preparedness and biomedical
advanced research and development. The House proposed
$420,000,000 for pandemic influenza and $430,000,000 for
biomedical advanced research and development.
PREVENTION AND WELLNESS FUND
(INCLUDING TRANSFER OF FUNDS)
The conference agreement includes $1,000,000,000 for the
Prevention and Wellness Fund, instead of $3,000,000,000 as
proposed by the House. The Senate did not propose funding for
a Prevention and Wellness Fund. As proposed by the House, up
to 0.5 percent of the funds provided may be used for
management and oversight expenses. Additionally, the
conference agreement includes language proposed by the House
that funding may be transferred to other appropriation
accounts of the Department of Health and Human Services
(HHS), as determined by the Secretary of HHS to be
appropriate.
Within the total, the conference agreement includes
$300,000,000 to be transferred to the Centers for Disease
Control and Prevention (CDC) to carry out the section 317
immunization program rather than $954,000,000 as proposed by
the House. The Senate did not propose funding for this
activity.
Also within the total, the conference agreement includes
$50,000,000 to be provided to States for carrying out
activities to implement healthcare-associated infections
(HAI) reduction strategies. The House proposed $150,000,000
for similar HAI prevention activities. The Senate did not
propose funding for similar activities.
Also within the total, the conference agreement includes
$650,000,000 to carry out evidence-based clinical and
community-based prevention and wellness strategies authorized
by the Public Health Service Act, as determined by the
Secretary, that deliver specific, measurable health outcomes
that address chronic disease rates. The House proposed
$500,000,000 for similar activities. The Senate did not
propose funding for similar activities.
DEPARTMENT OF EDUCATION
Education For The Disadvantaged
The conference agreement includes $13,000,000,000 for the
Education for the Disadvantaged account, as proposed by the
House. The Senate proposed $12,400,000,000 for this account.
The total conference agreement includes $10,000,000,000 for
title I formula grants and $3,000,000,000 for School
Improvement grants. Both the House and the Senate proposed
$11,000,000,000 for title I formula grants, but the House
proposed $2,000,000,000 for School Improvement grants, and
the Senate proposed $1,400,000,000.
The conferees intend that these funds should be available
during school years 2009-2010 and 2010-2011 to help school
districts mitigate the effect of the recent reduction in
local revenues and State support for education.
The conferees specify that within the total provided for
title I formula grants, $5,000,000,000 shall be allocated
through the targeted formula and the same amount should be
allocated through the education finance incentive grant
formula. This language was proposed by the House and the
Senate.
The conferees expect States to use some of the funding
provided for early childhood programs and activities, as
proposed by the Senate. The House did not propose similar
language.
The conferees direct the Department to encourage States to
use 40 percent of their School Improvement allocation for
middle and high schools, as proposed by the Senate. The House
did not propose similar language.
[[Page H1425]]
Each school district that receives this funding shall
report to its State educational agency, a school-by-school
listing of per pupil expenditures, from State and local
services, during the 2008-2009 academic year, no later than
December 1, 2009 as proposed by the Senate. Further, the
conferees require each State to compile and submit this
information to the Secretary no later than March 1, 2010.
Impact Aid
The conference agreement includes $100,000,000 for the
Impact Aid account, as proposed by the House. The Senate did
not propose funding for this account.
The conferees modify current law, exclusively for the
purposes of the American Recovery and Reinvestment Act, to
allow for greater participation of school districts impacted
by both students whose parents are associated with the
military and students residing on tribal lands, and to allow
funding to be better targeted to districts that have ``shovel
ready'' facility projects, including those that address
health and safety and ADA compliance issues, among other
things.
School Improvement Programs
The conference agreement includes $720,000,000 for the
School Improvement Programs account, instead of the
$1,066,000,000 as proposed by the House and $1,070,000,000 as
proposed by the Senate. Within the total, the conference
agreement includes $650,000,000 for the Enhancing Education
through Technology program. Both the House and Senate
proposed $1,000,000,000 for this program. The conference
agreement also includes $70,000,000 for Education for the
Homeless Children and Youth program, which is the same amount
proposed by the Senate. The House proposed $66,000,000 for
this program.
The conferees intend that these funds should be available
during school years 2009-2010 and 2010-2011 to help school
districts mitigate the effect of the recent reduction in
local revenues and State support for education.
The amount provided for the Education for Homeless Children
and Youth programs reflects the conferees' understanding of
the impact the economic crisis has had on this group of
disadvantaged students, and their commitment to helping
mitigate the effects. The Secretary shall provide each State
a grant that is proportionate to the number of homeless
students identified as such during the 2007-2008 academic
year relative to the number of homeless children nationally
during the same year. States shall award subgrants to local
educational agencies on a competitive basis, or using a
formula based on the number of homeless students identified
in each school district in the State. This language was
proposed by the Senate; the House did not propose similar
language.
Innovation And Improvement
The conference agreement includes $200,000,000 for the
Innovation and Improvement account, instead of the
$225,000,000 proposed by the House. The Senate did not
propose any money for this account. All of the funding
provided is for the Teacher Incentive Fund (TIF) program.
The conferees require the Institute for Education Sciences
to conduct a rigorous national evaluation of TIF to assess
the impact of performance-based teacher and principal
compensation systems. This language was proposed by the
House; the Senate did not propose similar language.
The conferees specify that these funds must be expended as
directed in the 5th, 6th, and 7th provisos under the
``Innovation and Improvement'' account in the Department of
Education Appropriations Act, 2008. This language was
proposed by the House; the Senate did not propose similar
language.
The conferees provide that 1 percent of the total
appropriation shall be for management and oversight of the
Teacher Incentive Fund. This language was proposed by the
House; the Senate did not propose similar language.
The conference agreement does not provide funding for the
Credit Enhancement for Charter Schools program.
Special Education
The conference agreement includes $12,200,000,000 for the
Special Education account, instead of $13,600,000,000 as
proposed by the House and $13,500,000,000 as proposed by the
Senate. Within the total, the conference agreement includes
$11,300,000,000 for section 611 of part B, $400,000,000 for
section 619 of part B, and $500,000,000 for part C of IDEA.
The House proposed $13,000,000,000 for section 611and
$600,000,000 for part C, whereas the Senate proposed the same
amount for section 611 and $500,000,000 for part C.
The conferees intend that these funds should be available
during school years 2009-2010 and 2010-2011 to help school
districts mitigate the effect of the recent reduction in
local revenues and State support for education.
Within the amount provided for part C of IDEA, the
Secretary is required to reserve the amount needed for grants
under section 643(e), and allocate any remaining funds in
accordance with section 643(c) of IDEA as specified by both
the House and Senate.
The conferees provide that the amount set aside for the
Department of Interior transfer for Native Americans shall be
equal to the lesser amount available during fiscal year 2008,
increased by inflation or the percentage increase in the
funds appropriated under section 611(i) (Secretary of the
Interior). This language was proposed by the Senate, the
House did not propose similar language.
Rehabilitation Services And Disability Research
The conference agreement includes $680,000,000 for the
Rehabilitation Services and Disability Research account as
opposed to $700,000,000 as proposed by the House and
$610,000,000 as proposed by the Senate. Within the total
provided, $540,000,000 is available for Vocational
Rehabilitation State Grants, as opposed to $500,000,000
proposed by the House and the Senate. The conferees include
$140,000,000 for Independent Living programs. The House
proposed $200,000,000 for Independent Living programs,
whereas the Senate proposed $110,000,000 for Independent
Living programs. Specifically, of the $140,000,000 available
for Independent Living programs, the funding is allocated as
follows: $18,200,000 for State Grants; $87,500,000 for
Independent Living Centers; and $34,300,000 for Services for
Older Blind Individuals.
Student Financial Assistance
The conference agreement includes $15,840,000,000 for the
Student Financial Assistance account as opposed to
$16,126,000,000 as proposed by the House and $13,930,000,000
as proposed by the Senate. Within the total provided,
$15,640,000,000 shall be available for Pell Grants, and
$200,000,000 shall be available for Work-Study. The House
proposed $15,636,000,000 for Pell Grants and $490,000,000 for
Work-Study; whereas the Senate proposed $13,869,000,000 for
Pell Grants and no money for Work-Study.
The conference agreement does not provide funding for
Perkins Loans.
The conference agreement specifies that funding is
available to support a $4,860 maximum Pell Grant award for
the 2009-2010 award year, as specified in the House bill.
With the additional $490 in mandatory funding, combined with
the increase in the fiscal year 2009 omnibus, the maximum
Pell Grant award will be $5,350. This language was proposed
by the House; the Senate did not propose similar language.
Student Aid Administration
The conference agreement includes $60,000,000 for the
Student Aid Administration account, as opposed to the
$50,000,000 as proposed by the House and $0 as proposed by
the Senate.
Higher Education
The conference agreement includes $100,000,000 for the
Higher Education account, the same amount proposed by the
House. The Senate proposed $50,000,000.
Institute Of Education Sciences
The conference agreement includes $250,000,000 for the
Institute of Education Sciences account, as proposed by the
House. The Senate did not propose any funding for this
program. Within this total, up to $5,000,000 may be used for
State data coordinator and for awards to public or private
organizations or agencies to improve data coordination, as
proposed by the House.
Departmental Management
OFFICE OF THE INSPECTOR GENERAL
The conference agreement includes $14,000,000 for the
Office of the Inspector General, as proposed by the House and
the Senate.
RELATED AGENCIES
Corportation for National and Community Service
OPERATING EXPENSES
(INCLUDING TRANSFER OF FUNDS)
The conference agreement includes $160,000,000 for the
operating expenses of the programs administered by the
Corporation for National and Community Service (CNCS), which
is the same level as proposed by both the House and the
Senate. The conference agreement includes language, as
proposed by the Senate, permitting funds to be used to
provide adjustments to awards for which the Chief Executive
Officer of CNCS determines that a waiver of the Federal share
limitation is warranted.
Within the total provided for Operating Expenses, the
conference agreement includes the following amounts:
(1) $89,000,000 shall be used to make additional awards to
existing AmeriCorps State and national grantees and to
provide adjustments to awards made prior to September 30,
2010 for which the Chief Executive Officer of the CNCS
determines that a waiver is warranted the--House proposed
similar language with regard to the existing grantees and the
Senate proposed similar waiver language;
(2) $6,000,000 shall be transferred to CNCS ``Salaries and
Expenses'' for necessary expenses relating to information
technology upgrades, of which up to $800,000 may be used to
administer the funds provided for CNCS programs--the House
proposed similar language with regard to management and
oversight of funds and the Senate proposed similar language
with regard to information technology upgrades;
(3) not less than $65,000,000, as proposed by the Senate,
for the AmeriCorps Volunteers in Service to America (VISTA)
program--the House did not propose similar language; and,
(4) up to 20 percent of the funding provided for AmeriCorps
State and National grants may be used for national direct
grants.
The conference agreement does not include the funding set-
asides proposed by the Senate for the National Civilian
Community Corps, one-time supplement grants to State
commissions, or national service research activities. The
House did not propose similar language.
Office of Inspector General
The conference agreement includes $1,000,000 for the Office
of Inspector General,
[[Page H1426]]
which is the same level as that proposed by both the House
and Senate.
NATIONAL SERVICE TRUST
(INCLUDING TRANSFER OF FUNDS)
The conference agreement includes $40,000,000 for the
National Service Trust (Trust), to be available until
expended, which is the same level as that proposed by both
the House and the Senate. The conference agreement includes
language that allows funds appropriated for the Trust to be
invested without regard to apportionment requirements.
Additionally, bill language is included allowing for funds to
be transferred to the Trust from the Operating Expenses
account upon determination that such transfer is necessary to
support the activities of national service participants and
after notice is transmitted to the Committees on
Appropriations of the House of Representatives and the
Senate.
Social Security Administration
LIMITATION ON ADMINISTRATIVE EXPENSES
(INCLUDING TRANSFER OF FUNDS)
The conference agreement includes $1,000,000,000 for the
Social Security Administration (SSA), instead of $900,000,000
as proposed by the House and $890,000,000 as proposed by the
Senate. Funds are provided for both infrastructure
improvements and critical agency operations.
Within the amount provided, $500,000,000 is provided for a
replacement of the SSA National Computer Center (NCC), which
is nearly 30 years old and will soon be unable to support the
critical systems necessary to SSA's mission. Funds may also
be used for the technology costs associated with the new
center. Language proposed by both the House and Senate is
modified to provide for critical oversight of the site
selection, construction and operation of the NCC, and the
Committees on Appropriations of the House and the Senate
expect regular updates on the progress on site selection and
key construction milestones prior to solicitations of bids
for these activities.
Within the amount provided, $500,000,000 is provided for
processing disability and retirement workloads, including
information technology acquisitions and research in support
of such activities. These additional funds will allow SSA to
process a growing workload of claims in a timely manner and
to accelerate activities to reduce the backlog of disability
claims. As the largest repository of electronic medical
images in the world, SSA has a vital interest in exploring
how health information technology can be integrated into the
disability process through the widespread adoption of
electronic medical records.<greek-m> The funds provided for
agency operations therefore include resources for SSA health
information technology research and activities to facilitate
the adoption of electronic medical records in disability
claims.
Office of Inspector General
The conference agreement includes $2,000,000 for the Social
Security Administration Office of Inspector General, as
proposed by the House, rather than $3,000,000 as proposed by
the Senate. These funds will be available through September
30, 2012 to support oversight and audit of Social Security
Administration activities funded in this Act.
GENERAL PROVISIONS--THIS TITLE
ADMINISTRATION AND OVERSIGHT OF DEPARTMENT OF LABOR ACTIVITIES
The conference agreement includes a provision similar to
one proposed by the Senate that provides that up to 1 percent
of the funds made available to the Department of Labor in
this title may be used for the administration, management,
and oversight of the programs, grants, and activities funded
by such appropriation, including the evaluation of the use of
such funds, subject to the provision of an operating
plan.<greek-m> The House bill contained a set-aside for
similar purposes.
MINIMUM WAGE STUDY
The conference agreement includes a modification of a
provision proposed by the Senate, requiring the Government
Accountability Office (GAO) to conduct a study to assess the
impact of minimum wage increases that have occurred, and are
scheduled to occur, in American Samoa and the Commonwealth of
Northern Mariana Islands. To provide sufficient economic
information for this study, additional Federal agency
economic data collection in the U.S. territories is required.
FEDERAL COORDINATING COUNCIL FOR COMPARATIVE EFFECTIVENESS RESEARCH
The conference agreement includes a general provision
establishing a Federal Coordinating Council for Comparative
Effectiveness Research (Council), as proposed by the House.
The Senate language proposed a similar Council, but included
the word, ``Clinical'', in the title and throughout the bill
language.
The conference agreement includes language to clarify that
the purpose of the Council is to reduce duplication of
comparative effectiveness research activities within the
Federal government. Duties of the Council are to (1) foster
coordination of comparative effectiveness and related health
services research conducted or supported by the Federal
government; and (2) advise the President and Congress on
strategies with respect to the infrastructure needs of
comparative effectiveness research and organizational
expenditures.
Additionally, the conference agreement includes language
that nothing shall be construed to permit the Council to
mandate coverage, reimbursement, or other policies for any
public or private payer. Further, the conference agreement
includes language to clarify that none of the reports
submitted or recommendations made by the Council shall be
construed as mandates or clinical guidelines for payment,
coverage, or treatment.
GRANTS FOR IMPACT AID CONSTRUCTION
The conference agreement authorizes Impact Aid construction
payments. Neither the House nor Senate included this
provision.
MANDATORY PELL GRANTS
The conference agreement provides $1,474,000,000 for the
mandatory part of the Pell Grant program, as proposed by the
House. The Senate did not propose any funding for this
program.
The additional funding will enable the mandatory add-on to
be provided in both award years 2009-2010 and 2010-2011, for
a total maximum Pell Grant award of $5,350 in award year
2009-2010.
PROMPT ALLOCATION OF FUNDS FOR EDUCATION
The conference agreement includes a provision enabling the
Department of Education to quickly disperse funds provided
under this Act. Neither the House nor Senate included this
provision.
TITLE IX--LEGISLATIVE BRANCH
Government Accountability Office
SALARIES AND EXPENSES
The conference agreement provides $25,000,000 as proposed
by the House instead of $20,000,000 as proposed by the Senate
for the Government Accountability Office to hire temporary
personnel and obtain contract services to support the
agency's oversight responsibilities under this Act.
GENERAL PROVISIONS--THIS TITLE
Section 901. Charges the Government Accountability Office
(GAO) with bimonthly reviews and reporting on selected States
and localities' use of funds provided in this Act. These
reports are to be posted on the Internet and linked to the
website established under this Act by the Recovery
Accountability and Transparency Board. GAO is authorized to
examine any records related to the obligation and use of
funds made available in this Act.
Section 902. Provides GAO authority to examine records
related to contracts awarded under this Act and to interview
relevant employees.
TITLE X--MILITARY CONSTRUCTION AND VETERANS AFFAIRS
Job creation.--The conferees note that the Associated
General Contractors of America estimates that each
$1,000,000,000 in non-residential construction spending will
create or sustain 28,500 jobs. Based on this estimate and
data provided by the Department of Defense and the Department
of Veterans Affairs, the conferees estimate that the
construction funds and other programs in this title will
create or sustain 97,200 jobs.
DEPARTMENT OF DEFENSE
Military Construction, Army
The conferees agree to provide $180,000,000, instead of
$920,000,000 as proposed by the House and $637,875,000 as
proposed by the Senate. Within the amount, the conferees
agree to provide $80,000,000 for child development centers
and $100,000,000 for warrior transition complexes.
Military Construction, Navy and Marine Corps
The conferees agree to provide $280,000,000, instead of
$350,000,000 as proposed by the House and $990,092,000 as
proposed by the Senate. Within the amount, the conferees
agree to provide $100,000,000 for troop housing, $80,000,000
for child development centers, and $100,000,000 for energy
conservation and alternative energy projects.
Military Construction, Air Force
The conferees agree to provide $180,000,000, instead of
$280,000,000 as proposed by the House and $871,332,000 as
proposed by the Senate. Within the amount, the conferees
agree to provide $100,000,000 for troop housing and
$80,000,000 for child development centers.
Military Construction, Defense-Wide
The conferees agree to provide $1,450,000,000, instead of
$3,750,000,000 as proposed by the House and $118,560,000 as
proposed by the Senate. Within the amount, the conferees
agree to provide $1,330,000,000 for the construction of
hospitals and $120,000,000 for the Energy Conservation
Investment Program.
Military Construction, Army National Guard
The conferees agree to provide $50,000,000, instead of
$140,000,000 as proposed by the House and $150,000,000 as
proposed by the Senate.
Military Construction, Air National Guard
The conferees agree to provide $50,000,000, instead of
$70,000,000 as proposed by the House and $110,000,000 as
proposed by the Senate.
Military Construction, Army Reserve
The conferees agree to provide no funds as proposed by the
Senate, instead of $100,000,000 as proposed by the House.
Military Construction, Navy Reserve
The conferees agree to provide no funds as proposed by the
Senate, instead of $30,000,000 as proposed by the House.
Military Construction, Air Force Reserve
The conferees agree to provide no funds as proposed by the
Senate, instead of $60,000,000 as proposed by the House.
[[Page H1427]]
Family Housing Construction, Army
The conferees agree to provide $34,507,000, instead of no
funds as proposed by the House and $34,570,000 as proposed by
the Senate.
Family Housing Operation And Maintenance, Army
The conferees agree to provide $3,932,000 as proposed by
the Senate, instead of no funds as proposed by the House.
Family Housing Construction, Air Force
The conferees agree to provide $80,100,000 as proposed by
the Senate, instead of no funds as proposed by the House.
Family Housing Operation And Maintenance, Air Force
The conferees agree to provide $16,461,000 as proposed by
the Senate, instead of no funds as proposed by the House.
Homeowners Assistance Fund
The conferees agree to provide $555,000,000, instead of no
funds as proposed by the House and $410,973,000 as proposed
by the Senate.
Department Of Defense Base Closure Account 1990
The conferees agree to provide no funds as proposed by the
Senate, instead of $300,000,000 as proposed by the House.
Administrative Provision
The conferees agree to include a provision (Sec. 1001) as
proposed by the Senate, with technical changes, providing for
a temporary expansion of homeowners assistance to respond to
the foreclosure and credit crisis.
DEPARTMENT OF VETERANS AFFAIRS
Veterans Health Administration
MEDICAL SUPPORT AND COMPLIANCE
The conferees agree to provide no funds as proposed by the
House, instead of $5,000,000 as proposed by the Senate.
MEDICAL FACILITIES
The conferees agree to provide $1,000,000,000, instead of
$950,000,000 as proposed by the House and $1,370,459,000 as
proposed by the Senate.
National Cemetery Administration
The conferees agree to provide $50,000,000 as proposed by
the House, instead of $64,961,000 as proposed by the Senate.
Departmental Administration
GENERAL OPERATING EXPENSES
The conferees agree to provide $150,000,000 for a temporary
increase in claims processing staff, instead of no funds as
proposed by the House and $1,125,000 as proposed by the
Senate for contract administration.
INFORMATION TECHNOLOGY SYSTEMS
The conferees agree to provide $50,000,000 for the Veterans
Benefits Administration, instead of no funds as proposed by
the House and $195,000,000 as proposed by the Senate.
OFFICE OF INSPECTOR GENERAL
The conferees agree to provide $1,000,000 as proposed by
the House, instead of $4,400,000 as proposed by the Senate.
CONSTRUCTION, MAJOR PROJECTS
The conferees agree to provide no funds as proposed by the
House, instead of $1,105,333,000 as proposed by the Senate.
CONSTRUCTION, MINOR PROJECTS
The conferees agree to provide no funds as proposed by the
House, instead of $939,836,000 as proposed by the Senate.
GRANTS FOR CONSTRUCTION OF STATE EXTENDED CARE FACILITIES
The conferees agree to provide $150,000,000, instead of no
funds as proposed by the House and $257,986,000 as proposed
by the Senate.
Administrative Provision
The conferees agree to include a provision (Sec. 1002)
authorizing the Filipino Veterans Equity Compensation Fund.
DEPARTMENT OF DEFENSE--CIVIL
Cemeterial Expenses, Army
SALARIES AND EXPENSES
The conferees agree to provide no funds as proposed by the
House, instead of $60,300,000 as proposed by the Senate.
TITLE XI--STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS
DEPARTMENT OF STATE
Administration Of Foreign Affairs
DIPLOMATIC AND CONSULAR PROGRAMS
The conference agreement includes $90,000,000 for urgent
domestic facilities requirements for passport and training
functions, the same amount as proposed by the Senate. The
House did not include any funds for this purpose. Funds under
the heading are available for obligation through September
30, 2010.
The Department of State estimates that these investments
will create up to 655 jobs in the United States and improve
the operational and training capabilities of the Department.
The conference agreement includes funds to expand passport
agencies, to continue design and begin construction of a
consolidated security training facility, and to enlarge
domestic facilities to accommodate increased language
training requirements for diplomatic and development
personnel. The conferees direct that funds made available for
a consolidated security training facility should be obligated
in accordance with United States General Services
Administration procedures.
The conference agreement requires the Secretary of State to
submit to the Committees on Appropriations a detailed
spending plan for funds made available under the heading not
later than 90 days after enactment of this Act. For passport
agencies, the spending plan is to be developed in
consultation with the Department of Homeland Security and the
General Services Administration to coordinate and/or co-
locate such agencies with other Federal facilities, to the
extent feasible. Funds provided shall be subject to the
regular notification procedures of the Committees on
Appropriations.
CAPITAL INVESTMENT FUND
(INCLUDING TRANSFER OF FUNDS)
The conference agreement includes $290,000,000 for
immediate information technology security and upgrades to
support mission-critical operations, instead of $276,000,000
as proposed by the House and $228,000,000 as proposed by the
Senate. Funds under the heading are available for obligation
through September 30, 2010.
Within the funds made available under the heading, the
conference agreement directs that up to $38,000,000 shall be
transferred to, and merged with, funds made available under
the heading ``Capital Investment Fund'' of the United States
Agency for International Development (USAID) for immediate
information technology investments. The conferees direct that
the Inspector General of USAID allocate sufficient resources
to conduct oversight of the transferred funds.
The Department of State and USAID estimate that these
investments will create at least 400 jobs in the United
States and improve the security, efficiency, and capability
of Department of State and USAID information technology
systems. These investments will address the critical
requirement of establishing back-up information management
facilities in the United States to protect the systems from
mission failures, enhance cyber-security, and secure
immediate hardware and software upgrades.
The conference agreement includes language requiring the
Secretary of State and the USAID Administrator to coordinate
information technology systems, where appropriate, in order
to increase efficiencies and eliminate redundancies. Such
coordination should factor in the costs, service
requirements, and program needs of both agencies and should
include efforts to co-locate backup information management
facilities and improve cyber-security.
The conference agreement requires the Secretary of State
and the USAID Administrator to submit to the Committees on
Appropriations, not later than 90 days after enactment of
this Act, a detailed spending plan for funds made available
under the heading. Funds provided shall be subject to the
regular notification procedures of the Committees on
Appropriations.
OFFICE OF INSPECTOR GENERAL
The conference agreement includes $2,000,000 for the Office
of Inspector General to conduct oversight of the funds made
available to the Department of State by this Act, instead of
$1,500,000 as proposed by the Senate. The House bill did not
include a separate appropriation for this purpose. Funds
provided are available for obligation through September 30,
2010.
International Commissions
INTERNATIONAL BOUNDARY AND WATER COMMISSION, UNITED STATES AND MEXICO
CONSTRUCTION
(INCLUDING TRANSFER OF FUNDS)
The conference agreement includes $220,000,000 for
immediate repair and rehabilitation requirements in the water
quantity program, instead of $224,000,000 as proposed by the
House and Senate. Funds are available for obligation through
September 30, 2010.
These funds will be used for immediate infrastructure
upgrades along 506 miles of flood control levees to
rehabilitate the following projects identified by the
International Boundary and Water Commission--United States
and Mexico in their fiscal year 2009 budget request as
unfunded needs: Rio Grande Flood Control System; Safety of
Dams; Colorado Boundary; and Capacity Preservation. The
Department of State estimates that these investments will
create 305 jobs in the United States.
Within the amount provided, the conference agreement
provides that up to $2,000,000 may be transferred to, and
merged with, funds made available under the heading
``Salaries and Expenses'' of the Commission. The conference
agreement also requires the Secretary of State to submit to
the Committees on Appropriations, not later than 90 days
after enactment of this Act, a detailed spending plan for
funds made available under the heading. Funds provided shall
be subject to the regular notification procedures of the
Committees on Appropriations.
UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT
Funds Appropriated To The President
CAPITAL INVESTMENT FUND
The conference agreement does not include a direct
appropriation under this heading of $58,000,000 as proposed
by the Senate. Instead, the agreement directs the transfer to
USAID of up to $38,000,000, from funds made available in this
Act under the heading ``Capital Investment Fund'' of the
Department of State, for immediate information technology
investments. The House bill did not include funds for this
purpose. Funds transferred are subject to the regular
notification procedures of the Committees on Appropriations.
OPERATING EXPENSES OF THE UNITED STATES AGENCY FOR INTERNATIONAL
DEVELOPMENT OFFICE OF INSPECTOR GENERAL
The conference agreement does not include $500,000 under
this heading, as proposed by
[[Page H1428]]
the Senate. The Office of Inspector General of the United
States Agency for International Development is directed to
conduct oversight of the funds transferred in this Act to
USAID from within available funds.
TITLE XII--TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND
RELATED AGENCIES
DEPARTMENT OF TRANSPORTATION
Office Of The Secretary
SUPPLEMENTAL DISCRETIONARY GRANTS FOR A NATIONAL SURFACE TRANSPORTATION
SYSTEM
The conference agreement provides $1,500,000,000 instead of
$5,500,000,000 as proposed by the Senate. The House did not
include a similar provision. Funds will be used to award
grants on a competitive basis for projects across all surface
transportation modes that will have a significant impact on
the Nation, a metropolitan area or a region. Provisions
require the Secretary to ensure an equitable geographic
distribution of funds and an appropriate balance in
addressing the needs of urban and rural communities.
Federal Aviation Administration
SUPPLEMENTAL FUNDING FOR FACILITIES AND EQUIPMENT
The conference agreement includes $200,000,000 as proposed
by the Senate. The House did not include a similar provision.
Within the funds provided, $50,000,000 is included to upgrade
the Federal Aviation Administration's (FAA) power systems;
$50,000,000 is included to modernize aging en route air
traffic control centers; $80,000,000 to replace air traffic
control towers and TRACONs; and, $20,000,000 is included to
install airport lighting, navigation and landing equipment.
GRANTS-IN-AID FOR AIRPORTS
The conference agreement provides $1,100,000,000 as
proposed by the Senate instead of $3,000,000,000 as proposed
by the House. Funds will be used by the Federal Aviation
Administration to provide discretionary airport grants to
repair and improve critical infrastructure at our nation's
airports. These investments will serve to provide important
safety and capacity benefits.
Federal Highway Administration
HIGHWAY INFRASTRUCTURE INVESTMENT
The conference agreement provides $27,500,000,000, instead
of $30,000,000,000 as proposed by the House and
$27,060,000,000 as proposed by the Senate. Funds are
distributed by formula, with a portion of the funds within
each State being suballocated by population areas. Set asides
are also provided for: management and oversight; Indian
reservation roads; park roads and parkways; forest highways;
refuge roads; ferry boats; on-the-job training programs
focused on minorities, women, and the socially and
economically disadvantaged; a bonding assistance program for
minority and disadvantaged businesses; Puerto Rico and the
territories; and environmentally friendly transportation
enhancements.
Federal Railroad Administration
CAPITAL ASSISTANCE FOR HIGH SPEED RAIL CORRIDORS AND INTERCITY
PASSENGER RAIL SERVICE
The conference agreement provides $8,000,000,000 instead of
$300,000,000 as proposed by the House and $2,250,000,000 as
proposed by the Senate. The conferees appropriated funds for
purposes outlined in both the Capital Assistance to States
and the High Speed Passenger Rail program under a combined
heading. The conferees have provided the Secretary
flexibility in allocating resources between the programs to
advance the goal of deploying intercity high speed rail
systems in the United States. The Capital Assistance to
States program first received funding in fiscal year 2008.
The High Speed Passenger Rail program is a new initiative
recently authorized under the Passenger Rail Investment and
Improvement Act of 2008.
CAPITAL GRANTS TO THE NATIONAL
RAILROAD PASSENGER CORPORATION
The conference agreement provides $1,300,000,000 instead of
$800,000,000 as proposed by the House and $850,000,000 as
proposed by the Senate. Of the total funds appropriated, the
conferees provide $450,000,000 for capital grants for
security improvements to include life safety improvements.
The conferees also provide that no more than 60% of the
remaining funds shall be spent for capital improvements on
the Northeast Corridor.
Federal Transit Administration
TRANSIT CAPITAL ASSISTANCE
The conference agreement provides $6,900,000,000 instead of
$8,400,000,000 as proposed by the Senate and $7,500,000,000
as proposed by the House. Within the total amount, 80 percent
of the funds shall be provided through the Federal Transit
Administration's (FTA) urbanized formula; 10 percent shall be
provided through FTA's rural formula, and, 10 percent shall
be provided through FTA's growing states and high density
formula. In addition, the conference agreement provides 2.5
percent of the rural funds for tribal transit needs and
includes $100,000,000 (instead of $200,000,000 as proposed by
the Senate) for discretionary grants to public transit
agencies for capital investments that will assist in reducing
the energy consumption or greenhouse gas emissions of their
public transit agencies.
FIXED GUIDEWAY INFRASTRUCTURE INVESTMENT
The conference agreement provides $750,000,000 instead of
$2,000,000,000 as proposed by the House. The Senate did not
include a similar provision. These funds will be distributed
through an existing authorized formula for capital projects
to modernize or improve existing fixed guideway systems,
including purchase and rehabilitation of rolling stock,
track, equipment and facilities. It is estimated that the
state-of-good-repair capital backlog for existing fixed
guideway systems is nearly $50 billion.
CAPITAL INVESTMENT GRANTS
The conference agreement provides $750,000,000 instead of
$2,500,000,000 as proposed by the House. The Senate did not
include a similar provision. The funds will be distributed on
a discretionary basis for New Starts and Small Starts
projects that are already in construction or are nearly ready
to begin construction.
Maritime Administration
SUPPLEMENTAL GRANTS FOR ASSISTANCE TO SMALL SHIPYARDS
The conference agreement provides $100,000,000 for grants
to small shipyards as proposed by the Senate. The House did
not include a similar provision.
Office of Inspector General
SALARIES AND EXPENSES
The conference agreement provides $20,000,000 as proposed
by the House and the Senate.
GENERAL PROVISION--DEPARTMENT OF TRANSPORTATION
Section 1201 ensures continued State investment in certain
identified programs for which the State receives funding in
this Act and requires grant recipients to report regularly on
the use of those funds as proposed by the House. The Senate
did not include a similar provision.
The conference agreement does not include a provision as
proposed by the Senate which extends the Federal Transit
Administration's contingent commitment authority.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Public and Indian Housing
PUBLIC HOUSING CAPITAL FUND
The conference agreement provides $4,000,000,000, instead
of $5,000,000,000 as proposed by both the House and the
Senate. This funding will assist public housing authorities
in rehabilitating and retrofitting public housing units,
including increasing the energy efficiency of units and
making critical safety repairs. Of the funding provided,
$3,000,000,000 will be distributed to public housing
authorities through the existing formula and $1,000,000,000
will be awarded through a competitive process.
NATIVE AMERICAN HOUSING BLOCK GRANTS
The conference agreement provides $510,000,000, as proposed
by the Senate, instead of $500,000,000, as proposed by the
House. This funding will rehabilitate and improve energy
efficiency in housing units maintained by Native American
housing programs. Half of the funding will be distributed by
formula and half will be competitively awarded to projects
that can be started quickly.
Community Planning and Development
COMMUNITY DEVELOPMENT FUND
The conference agreement provides $3,000,000,000, of which
$1,000,000,000 is appropriated for the Community Development
Block Grant program and $2,000,000,000 is available for the
Neighborhood Stabilization Program. This funding is provided
instead of the $5,190,000,000 proposed by the House. Funding
was not provided in the Senate. The Neighborhood
Stabilization Program funding will assist states, local
governments, and nonprofits in the purchase and
rehabilitation of foreclosed, vacant properties in order to
create more affordable housing and reduce neighborhood
blight.
HOME INVESTMENT PARTNERSHIPS PROGRAM
The conference agreement provides $2,250,000,000, as
proposed by the Senate, instead of $1,500,000,000, as
proposed by the House. Funds are provided to coordinate with
the Low Income Housing Tax Credit to fill financing gaps
caused by the collapse of the tax credit market and to
jumpstart stalled housing development projects, thereby
creating jobs.
SELF-HELP AND ASSISTED HOMEOWNERSHIP OPPORTUNITY PROGRAM
The conference agreement does not provide funding for this
account. The House proposed $10,000,000 for this account, but
the Senate did not propose funding under this heading.
HOMELESSNESS PREVENTION FUND
The conference agreement provides $1,500,000,000, as
proposed by both the House and the Senate. Funding will
provide short term rental assistance, housing relocation, and
stabilization services for families who may become homeless
due to the economic crisis. Funds are distributed by formula.
The conference agreement directs the Secretary of HUD to
submit a report to the House and Senate Committees on
Appropriations one year after enactment of the Act that
details how the funding provided in this account has been
used to alleviate the effects of the Nation's current
economic recession and prevent homelessness.
Housing Programs
ASSISTED HOUSING STABILITY AND ENERGY AND GREEN RETROFIT INVESTMENTS
The conference agreement provides $2,250,000,000 as
proposed by the Senate instead of $2,500,000,000 as proposed
by the
[[Page H1429]]
House. Of this amount, $2,000,000,000 will provide full-year
payments to landlords participating in the Section 8 Project-
Based program, and $250,000,000 will support a program to
upgrade HUD sponsored low-income housing to increase energy
efficiency, including new insulation, windows, and furnaces.
Office of Lead Hazard Control and Healthy Homes
The conference agreement provides $100,000,000, as proposed
by both the House and the Senate. Funding is provided for
competitive grants to local governments and nonprofit
organizations to remove lead-based paint hazards in low-
income housing. Projects that were highly rated in 2008
competitions but were not funded due to constrained resources
will be the focus of these resources, thereby ensuring that
the funds are spent quickly and effectively.
Management and Administration
OFFICE OF INSPECTOR GENERAL
The conference agreement provides $15,000,000 as proposed
by the House and Senate. This funding will assist the IG in
monitoring the use of these funds to ensure that funding
provided in this bill is used in an effective and efficient
manner.
GENERAL PROVISIONS
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Section 1202 raises the Federal Housing Administration
(FHA) loan limits for calendar year 2009 to the level set in
calendar year 2008, as proposed by the House.
Section 1203 raises the Government Sponsored Enterprise
(GSE) conforming loan limit for calendar year 2009, as
proposed by the House.
Section 1204 raises the Home Equity Conversion Mortgage
(HECM) loan limit for calendar year 2009, as proposed by the
House.
The conference agreement does not include a provision as
proposed by the Senate regarding changes to the Hope for
Homeowners program.
TITLE XIII--HEALTH INFORMATION TECHNOLOGY
Health Information Technology..........................................
Short Title; Table of Contents of Title. (House bill Sec. 4001;
Senate bill Sec. 1301; Conference agreement Sec. 13001)...........1
Subtitle A--Promotion of Health Information Technology................1
Part I--Improving Health Care Quality, Safety, and Efficiency.......1
ONCHIT; Standards Development and Adoption. (House bill Sec. 4101;
Senate bill Sec. 13101; Conference agreement Sec. 13101)........1
Sec. 3000. Definitions..........................................1
Sec. 3001. Office of the National Coordinator for Health
Information Technology........................................1
Sec. 3002. HIT Policy Committee.................................1
Sec. 3003. HIT Standards Committee..............................1
Sec. 3004. Process for Adoption of endorsed Recommendations;
Adoption of Initial Set of Standards, Implementation
Specifications, and Certification Criteria....................1
Sec. 3005. Application and Use of Adopted Standards and
Implementation Specifications by Federal Agencies.............1
Sec. 3006. Voluntary Application and Use of Adopted Standards and
Implementation Specifications by Private Entities.............1
Sec. 3007. Federal Health Information Technology................1
Sec. 3008. Transitions..........................................1
Sec. 3009. Relation to HIPAA Privacy and Security Law...........1
Sec. 3010. Authorization for Appropriations.....................1
Technical Amendment. (House bill Sec. 4102; Senate bill Sec. 13102;
Conference agreement Sec. 13102)................................1
Part II--Application and Use of Adopted health Information Technology
Standards; Reports................................................1
Coordination of Federal Activities with Adopted Standards and
Implementation Specifications. (House bill Sec. 4111; Senate bill
Sec. 13111; Conference agreement Sec. 13111)....................1
Application to Private Entities. (House bill Sec. 4112; Senate bill
Sec. 13112; Conference agreement Sec. 13112)....................1
Study and Reports. (House bill Sec. 4113; Senate bill Sec. 1313;
Conference agreement Sec. 13113)................................1
Subtitle B--Testing of Health Information Technology..................1
National Institute for Standards and Technology Testing. (House bill
Sec. 4201; Senate bill Sec. 13201; Conference agreement Sec. 132011
Research and Development Programs. (House bill Sec. 4202; Senate bill
Sec. 13202; Conference agreement Sec. 13202)......................1
Subtitle C--Incentives for the Use of Health Information Technology...1
Part I--Grants and Loans Funding....................................1
Grant, Loan, and Demonstration Programs. (House bill Sec. 4301;
Senate bill Sec. 13301; Conference agreement Sec. 13301)........1
Sec. 3011. Immediate Funding to Strengthen the Health Information
Technology Infrastructure.....................................1
Sec. 3012. Health Information Technology Implementation
Assistance....................................................1
Sec. 3013. State Grants to Promote Health Information Technology1
Sec. 3104. Competitive Grants to States and Indian Tribes for the
Development of Loan Programs to Facilitate the Widespread
Adoption of Certified EHR Technology..........................1
Sec. 3015. Demonstration Program to Integrate Information
Technology into Clinical Education............................1
Sec. 3016. Information Technology Professionals in Health Care..1
Sec. 3017. General Grant and Loan Provision.....................1
Sec. 3018. Authorization for Appropriations.....................1
Subtitle D--Privacy...................................................1
Definitions. (House bill Sec. 4400; Senate bill Sec. 13400;
Conference agreement Sec. 13400)................................1
Part I--Improved Privacy Provisions and Security Provisions.........1
Application of Security Provisions and Penalties to Business
Associates of Covered Entities; Annual Guidance on Security
Provisions. (House bill Sec. 4401; Senate bill Sec. 13401;
Conference agreement Sec. 13401)................................1
Notification in the Case of Breach. (House bill Sec. 4402; Senate
bill Sec. 13402; Conference agreement Sec. 13402)...............1
Education on Health Information Privacy. (House bill Sec. 4403;
Senate bill Sec. 13403; Conference agreement Sec. 13403)........1
Application of Privacy Provisions and Penalties to Business
Associates of Covered Entities. (House bill Sec. 4404; Senate
bill Sec. 13404; Conference agreement Sec. 13404)...............1
Restrictions on Certain Disclosures and Sales of Health
Information; Accounting of Certain Protected Health Information
Disclosures; Access to Certain Information in Electronic Format.
(House bill Sec. 4405; Senate bill Sec. 13405; Conference
agreement Sec. 13405)...........................................1
Conditions of Certain Contracts as Part of Health Care Operations.
(House bill sec. 4406; Senate bill Sec. 13406; Conference
agreement Sec. 13406)...........................................1
Temporary Breach Notification Requirement for Vendors or Personal
Health Records and Other Non-HIPAA Covered Entities. (House bill
Sec. 4407; Senate bill Sec. 13407; Conference agreement Sec.
13407)..........................................................1
Business Associate Contracts Required for Certain Entities. (House
bill Sec. 4408; Senate bill Sec. 13408; Conference agreement Sec.
13408)..........................................................1
Clarification of Application of Wrongful Disclosures Criminal
Penalties. (House bill Sec. 4409; Senate bill Sec. 13409;
Conference agreement Sec. 13409.................................1
Improved Enforcement. (House bill Sec. 4410; Senate bill Sec.
13410; Conference agreement Sec. 13410..........................1
Audits. (House bill Sec. 4411; Senate bill Sec. 13411; Conference
agreement Sec. 13411)...........................................1
Special Rule for Information to Reduce Medication Errors and
Improve Patient Safety. (House bill Sec. 4412)..................1
Part II--Relationship to Other Laws; Regulatory References; Effective
Date; Reports.....................................................1
Relationship to Other Laws. (House bill Sec. 4421; Senate bill Sec.
13421; Conference agreement Sec. 13421).........................1
Regulatory References. (House bill Sec. 4422; Senate bill Sec.
13422; Conference agreement Sec. 13422).........................1
Effective Date. (House bill Sec. 4423; Senate bill Sec. 13423;
Conference agreement Sec. 13423)................................1
Studies, Reports, Guidance. (House bill Sec. 4424; Senate bill Sec.
13424; Conference agreement Sec. 13424).........................1
Health Information Technology
Short Title; Table of Contents of Title. (House bill Sec.
4001; Senate bill Sec. 13101; Conference agreement Sec.
13001)
This provision specifies that the title may be cited as the
``Health Information Technology for Economic and Clinical
Health Act'' or the ``HITECH Act.''
[[Page H1430]]
Subtitle A--Promotion of Health Information Technology
Part I--Improving Health Care Quality, Safety, and Efficiency
ONCHIT; Standards Development and Adoption. (House bill Sec.
4101; Senate bill Sec. 13101; Conference agreement Sec.
13101)
Current Law
There are no existing statutory provisions regarding the
current Office of the National Coordinator for Health
Information Technology (ONCHIT) within the Department of
Health and Human Services (HHS). ONCHIT was created by
Executive Order 13335, signed by the President on April 27,
2004. The National Coordinator was instructed to develop,
maintain, and direct a strategic plan to guide the nationwide
implementation of interoperable health information technology
(HIT) in the public and private health care sectors. In 2005,
the Secretary created the American Health Information
Community (AHIC), a public-private advisory body, to make
recommendations to the Secretary on how to accelerate the
development and adoption of interoperable HIT using a market-
driven approach. The AHIC charter required it to provide the
Secretary with recommendations to create a successor entity
based in the private sector. AHIC Successor, Inc. was
established in July 2008 to transition AHIC's accomplishments
into a new public-private partnership. That partnership, the
National eHealth Collaborative (NeHC), was launched on
January 8, 2009.
ONCHIT awarded a contract to the American National
Standards Institute (ANSI) to establish a public-private
collaborative, known as the Healthcare Information Technology
Standards Panel (HITSP), to harmonize existing HIT standards
and identify and establish standards to fill gaps. To date,
the Secretary has recognized over 100 harmonized standards,
including many that allow interoperability of electronic
health records (EHRs). To ensure that these standards are
incorporated into products, a second contract was awarded to
the Certification Commission for Healthcare Information
Technology (CCHIT), a private, nonprofit organization created
by HIT industry associations, which establishes criteria for
certifying products that use recognized standards. CCHIT has
certified over 150 ambulatory and inpatient EHR products.
House Bill
The House bill would establish in the Public Health Service
Act (PHSA; 42 USC 201 et seq.) a new Title XXX--Health
Information Technology and Quality, comprising the following
sections.
Sec. 3000. Definitions. The House bill defines the
following terms: certified EHR technology, enterprise
integration, health care provider, health information, health
information technology, health plan, HIT Policy Committee,
HIT Standards Committee, individually identifiable health
information, laboratory, National Coordinator, pharmacist,
qualified electronic health record, and state.
Sec. 3001. Office of the National Coordinator for Health
Information Technology. The House bill would establish within
HHS the Office of the National Coordinator for Health
Information Technology (ONCHIT). The National Coordinator
would be appointed by the Secretary and report directly to
the Secretary. The National Coordinator would be charged with
the following duties. First, the National Coordinator would
be required to review and determine whether to endorse
standards recommended by the HIT Standards Committee
(described below). Second, the National Coordinator would be
responsible for coordinating HIT policy and programs within
HHS and with those of other federal agencies and would be a
leading member in the establishment of the HIT Policy
Committee and the HIT Standards Committee and act as a
liaison among these Committees and the federal government.
Third, the National Coordinator would be required to update
the Federal Health IT Strategic Plan (developed as of June 3,
2008) to include specific objectives, milestones, and metrics
with respect to the electronic exchange and use of health
information, the utilization of an EHR for each person in the
United States by 2014, and the incorporation of privacy and
security protections for the electronic exchange of an
individual's health information, among other things. The plan
would include measurable outcome goals and the National
Coordinator would be required to republish the plan,
including all updates. Fourth, the National Coordinator would
maintain and update a website to post relevant information
about the work related to efforts to promote a nationwide
health information technology infrastructure. Fifth, the
National Coordinator would be required, in consultation with
the National Institute of Standards and Technology (NIST), to
develop a program for the voluntary certification of HIT as
being in compliance with applicable certification criteria
adopted by the Secretary. Sixth, the National Coordination
would have to prepare several reports, including a report on
any additional funding or authority needed to evaluate and
develop standards for a nationwide health information
technology infrastructure; a report on lessons learned from
HIT implementation by major public and private health care
systems; a report on the benefits and costs of the electronic
use and exchange of health information; an assessment of the
impact of HIT on communities with health disparities and in
areas that serve uninsured, underinsured, and medically
underserved individuals; and an estimate of the public and
private resources needed annually to achieve utilization of
an EHR for each person in the United States by 2014. Seventh,
the National Coordinator would be required to establish a
national governance mechanism for the national health
information network. Finally, the National Coordinator would
be permitted to accept or request federal detailees and would
be required, within 12 months of enactment, to appoint a
Chief Privacy Officer of the Office of the National
Coordinator to advise the National Coordinator on privacy,
security, and data stewardship.
Sec. 3002. HIT Policy Committee. The House bill would
establish an HIT Policy committee to make policy
recommendations to the National Coordinator relating to the
implementation of a nationwide health information technology
infrastructure. The duties of the HIT Policy Committee would
include providing recommendations on a policy framework for
the development and adoption of a nationwide health
information technology infrastructure, recommending areas in
which standards are needed for the electronic exchange and
use of health information, and recommending an order of
priority for the development of such standards. The Committee
would be required to provide recommendations in six areas:
(1) technologies that protect the privacy and security of
electronic health information; (2) a nationwide HIT
infrastructure that enables electronic information exchange;
(3) nationwide adoption of certified EHRs; (4) EHR
technologies that allow for an accounting of disclosures; (5)
using EHRs to improve health care quality; and (6) encryption
technologies that render individually identifiable health
information unusable, unreadable, and indecipherable to
unauthorized individuals. The bill describes other areas that
the committee might consider, including using HIT to reduce
medical errors, and telemedicine. The membership of the HIT
Policy Committee would reflect (at least) providers,
ancillary healthcare workers, consumers, purchasers, health
plans, technology vendors, researchers, relevant federal
agencies, and individuals with technical expertise on health
care quality and privacy and security. The National
Coordinator must ensure that the Committee's recommendations
are considered in the development of policies, and the
Secretary would be required to publish all of the Committee's
recommendations in the Federal Register and post them on a
website. The provisions of the Federal Advisory Committee
Act, other than section 14, would apply to the HIT Policy
Committee.
Sec. 3003. HIT Standards Committee. The House bill would
establish an HIT Standards Committee to recommend to the
National Coordinator standards, implementation
specifications, and certification criteria for the electronic
exchange of health information. Duties of the HIT Standards
Committee would include the development and pilot testing of
standards, and serving as a forum for the participation of a
broad range of stakeholders to provide input on the
development, harmonization, and recognition of standards. Not
later than 90 days after enactment, the HIT Standards
Committee would outline (and annually update) a schedule for
assessing the policy recommendations developed by the HIT
Policy Committee, and this schedule would be published in the
Federal Register. In addition, the Committee would be
required to conduct open public meetings and develop a
process to allow for public comment on this schedule. The
membership of the HIT Standards Committee would reflect (at
least) providers, ancillary healthcare workers, consumers,
purchasers, health plans, technology vendors, researchers,
relevant federal agencies, and individuals with technical
expertise on health care quality and privacy and security.
The National Coordinator would be required to ensure that the
Committee's recommendations are considered in the development
of policies; the Secretary would be authorized to provide
financial assistance to Committee members that are non-profit
or consumer advocacy groups in order to defray costs
associated with participating in the Committee's activities,
and the Committee would be required to publish all its
recommendations in the Federal Register and post them on a
website. The provisions of the Federal Advisory Committee
Act, other than section 14, would apply to the HIT Standards
Committee.
Sec. 3004. Process for Adoption of endorsed
Recommendations; Adoption of Initial Set of Standards,
Implementation Specifications, and Certification Criteria.
The House bill would require the Secretary, within 90 days of
receiving from the National Coordinator a recommendation for
HIT standards, implementation specifications, or
certification criteria, to determine in consultation with
representatives of other relevant federal agencies, whether
or not to propose adoption of such standards, implementation
specifications, or certification criteria. Adoption would be
accomplished through regulation, whereas a decision by the
Secretary not to adopt would have to be conveyed in writing
to the National Coordinator and the HIT Standard Committee.
The Secretary would be required to adopt, through rulemaking,
an initial set of standards by December 31, 2009.
Sec. 3005. Application and Use of Adopted Standards and
Implementation Specifications by Federal Agencies. The House
bill refers to Section 4111 (see below) for the requirements
relating to the application and use of adopted standards by
federal agencies.
[[Page H1431]]
Sec. 3006. Voluntary Application and Use of Adopted
Standards and Implementation Specifications by Private
Entities. The House bill would make the application and use
of adopted standards voluntary for private entities.
Sec. 3007. Federal Health Information Technology. The House
bill would require the National Coordinator to support the
development, routine updating and provision of qualified EHR
technology unless the Secretary determined that the needs and
demands of providers are being substantially and adequately
met through the marketplace. The National Coordinator would
be permitted to charge a nominal fee to providers for the
adoption of this health information technology system.
Sec. 3008. Transitions. The House bill would provide for
the transfer of all functions, personnel, assets,
liabilities, and administrative actions of the existing
ONCHIT, created under Executive Order 13335, to the new
ONCHIT established by this Act. Similarly, all functions,
personnel, assets, liabilities applicable to AHIC Successor,
Inc., now operating as the National eHealth Collaborative
(NeHC), would be transferred to the HIT Policy Committee or
the HIT Standards Committee, as appropriate. Nothing in the
bill would require the creation of a new entity to the extent
that the existing ONCHIT is consistent with the provision of
Section 3001. Similarly, nothing in the bill would prohibit
NeHC from modifying its charter, duties, membership, and
other functions to be consistent with Sections 3002 and 3003
in a manner that would permit the Secretary to recognize it
as the HIT Policy Committee or the HIT Standards Committee.
Sec. 3009. Relation to HIPAA Privacy and Security Law. The
House bill specifies that this title may not be construed as
having any effect on the authorities of the Secretary under
HIPAA privacy and security law.
Sec. 3010. Authorization for Appropriations. The House bill
would authorize an appropriation of $250 million for FY2009
for implementing this subtitle.
Senate Bill
The Senate bill includes the same provisions as the House
bill, other than an authorization for appropriations (Sec.
3010), but with the following additional language: (1) the
definition of health care provider is broader than in the
House bill; (2) the duties of the National Coordinator would
include reviewing federal HIT investments to ensure that
federal HIT programs are meeting the objectives of the
strategic plan, and providing comments and advice on federal
HIT programs at the request of the Office of Management and
Budget (OMB); (3) the updated HIT Strategic Plan would
include specific plans for ensuring that populations with
unique needs, such as children, are appropriately addressed
in the technology design; (4) the Secretary would be
authorized to recognize an entity or entities for harmonizing
or updating standards and implementation specifications; and
(5) the National Coordinator's report on resource
requirements for achieving nationwide EHR utilization by 2014
would include resources for health informatics and management
education programs to ensure a sufficient HIT workforce.
In addition, the Senate bill would require the HIT Policy
Committee to provide recommendations on the use of electronic
systems to collect patient demographic data (consistent with
the evaluation of health disparities data under Sec. 1809 of
the Social Security Act) and on technologies and design
features that address the needs of children and other
vulnerable populations, instead of providing recommendations
on encryption technologies as required in the House bill. To
the list of other areas that the HIT Policy Committee might
consider, the Senate bill includes methods for allowing
individuals and their caregivers secure access to protected
health information. Unlike the House bill, the Senate bill
specifies the size and composition of the HIT Policy
Committee, and outlines certain details of its operation.
The Senate bill includes additional provisions regarding
the operations of the HIT Standards Committee. They include
conducting open and public meetings, adopting a consensus
approach to standards development and harmonization, and
providing an opportunity for public comment. Unlike the House
bill, which would make the HIT Standards Committee subject to
the Federal Advisory Committee Act, the Senate bill would
apply OMB Circular A-119 (Federal Participation in the
Development and Use of Voluntary Consensus Standards) to the
Committee. It also would require the Secretary, as necessary
and consistent with the HIT Standards Committee's published
schedule, to adopt additional standards, implementation
specifications, and certification criteria following the
adoption of the initial set of requirements by December 31,
2009.
The Senate bill's transition provision states that nothing
in the bill would require the creation of a new ONCHIT, to
the extent that the existing office is consistent with the
Act. Further, nothing in the bill would prohibit National
eHealth Collaborative from modifying its structure and
function in order to be recognized as the HIT Standards
Committee. Finally, the Senate bill specifies that until
recommendations are made by the HIT Policy Committee,
recommendations of the HIT Standards Committee would have to
be consistent with the most recent recommendations of AHIC
Successor, Inc.
Conference Agreement
The conference agreement is largely similar to the
provisions in both bills. Here are some additions or
distinctions:
Sec. 3000.
Definitions. The conference agreement includes a broader
definition of health care provider, including additions by
the Senate and House. The conference agreement clarified the
definition of health information technology to include
internet based products and HIT aimed at usage by patients.
The term ``qualified electronic health record'' includes
computerized provider order entry systems.
Sec. 3001.
Office of the National Coordinator of Health Information
Technology. The duties of the National Coordinator include
the review of federal health information technology
investments from the Senate bill.
The elements of the strategic plan developed by the
National Coordinator include the Senate language regarding
strategies to enhance increase prevention and coordination of
community resources and plans for ensuring that populations
with unique needs are addressed in technology design, as
appropriate.
The section on harmonization included in the Senate bill
was modified and moved to Section 3003 and ensures that
harmonization standards or updates developed by other
entities can be recognized by the HIT Standards Committee.
The conference agreement retains the intent of the Senate
language requiring the National Coordinator to estimate
resources needed to establish a sufficient health information
technology workforce.
To the extent that this section calls the National
Coordinator to ensure that every person in the United States
have an EHR by 2014, this goal is not intended to require
individuals to receive services from providers that have
electronic health records and is aimed at having the National
Coordinator take steps to help providers adopt electronic
health records. This provision does not constitute a legal
requirement on any patient to have an electronic health
record. For religious or other reasons, non-traditional
health care providers may also choose not to use an
electronic health record.
Sec. 3002.
HIT Policy Committee. The conference agreement includes the
House language on areas required for consideration regarding
security of transmitted individually identifiable health
information and includes the Senate language regarding
collection of demographic data and modified the Senate
language regarding technology to address the needs of
children.
The language on other areas of consideration includes the
Senate language regarding methods to facilitate secure access
by an individual to their protected health information and
modified the Senate language regarding access to such
information by a family member, caregiver, or guardian acting
on behalf of a patient.
The conference agreement adopted the Senate specifics on
the membership of the HIT Policy Committee. The conference
agreement modified the language by increasing the members
appointed by the Secretary and those representing patients or
consumers and modified the Senate language regarding
participation on the Committee and to allow the Secretary to
fill seats if membership has not been filled by 45 days after
enactment.
Sec. 3003.
HIT Standards Committee. The Conference report includes
provisions from the House and Senate bills. The principal
changes from the House-passed bill are: (1) there is a new
provision allowing the Standards Committee to recognize
harmonized standards from an outside entity; (2) there is a
new provision requiring balanced membership and that that no
single sector unduly influence the recommendations or
procedures of the committee; and (3) there is a new provision
requiring the involvement of outside experts with relevant
expertise. The principal change from the Senate-passed bill
is that the Standards Committee is subject to the Federal
Advisory Committee Act.
Sec. 3004.
Process for Adoption of endorsed Recommendations; Adoption
of Initial Set of Standards, Implementation Specifications,
and Certification Criteria. The Conference report includes
provisions from the House and Senate bills. The principal
change from the House-passed bill and the Senate-passed bill
is that there is explicit authority to allow the Secretary to
issue the initial set of standards as interim final rules.
This clarification should not be read to impact the authority
or discretion of the Secretary in future regulations
regarding standards.
Sec. 3005.
Application and Use of Adopted Standards and Implementation
Specifications by Federal Agencies. The conference report
includes this provision unaltered.
Sec. 3006.
Voluntary Application and Use of Adopted Standards and
Implementation Specifications by Private Entities. The
Conference report contains the same policy as the House and
Senate bills, with language modified for technical purposes.
Sec. 3007.
Federal Health Information Technology. The Conference
report includes provisions
[[Page H1432]]
from the House and Senate bills. The principal change from
the House-passed bill is that the Secretary is authorized to
``make available'' rather than ``provide'' the technology
specified under the Section. The principal change from the
Senate-passed bill is that only the Secretary is charged with
making the assessment of market failure.
Sec. 3008.
Transitions. The Conference report contains the same policy
as the House and Senate with language modified for technical
purposes.
Sec. 3009.
Relation to HIPAA Privacy and Security Law. The Conference
report contains the same Policy as the House and Senate
bills, with language modified for technical purposes. In
addition, the conference report includes a provision
clarifying the discretion of the Secretary.
Sec. 3010.
Authorization for Appropriations. The Conference report
does not include this section.
Technical Amendment. (House bill Sec. 4102; Senate bill Sec.
13102; Conference agreement Sec. 13102)
Current Law
Under HIPAA, the definition of a health plan (42 USC
1320(d)(5)) includes Parts A, B, and C of the Medicare
program.
House Bill
The House bill would amend the HIPAA definition of health
plan to include Medicare Part D.
Senate Bill
Same provision.
Conference Agreement
Same provision.
Part II--Application and Use of Adopted Health. Information Technology
Standards; Reports
Coordination of Federal Activities with Adopted Standards and
Implementation Specifications. (House bill Sec. 4111;
Senate bill Sec. 13111; Conference agreement Sec. 13111)
Current Law
No provisions; however, in August 2006, the President
issued Executive Order 13410 committing federal agencies that
purchase and deliver health care to require the use of HIT
that is based on interoperability standards recognized by the
Secretary.
House Bill
The House bill would require federal agencies that
implement, acquire, or upgrade HIT systems for the electronic
exchange of health information to use HIT systems and
products that meet the standards adopted by the Secretary
under this Act. The President would be required to ensure
that federal activities involving the collection and
submission of health information are consistent with such
standards within three years of their adoption.
Senate Bill
Same provision.
Conference Agreement
Same provision.
Application to Private Entities. (House bill Sec. 4112;
Senate bill Sec. 13112; Conference agreement Sec. 13112)
Current Law
No provisions.
House Bill
The House bill would require health care payers and
providers that contract with the federal government to use
HIT systems and products that meet the standards adopted by
the Secretary under this Act.
Senate Bill
Same provision.
Conference Agreement
Same provision.
Study and Reports. (House bill Sec. 4113; Senate bill Sec.
13113; Conference agreement Sec. 13113)
Current Law
No provisions.
House Bill
The House bill would require the Secretary, within two
years and annually thereafter, to report to Congress on
efforts to facilitate the adoption of a nationwide system for
the electronic exchange of health information; to conduct a
study, not later than two years after enactment, that
examines methods to create efficient reimbursement incentives
for improving health care quality in Federally qualified
health centers, rural health clinical and free clinics; and
to conduct a study, not later than 24 months after enactment,
of matters relating to the potential use of new aging
services technology to assist seniors, individuals with
disabilities and their caregivers throughout the aging
process.
Senate Bill
Same provision.
Conference Agreement
Same provision.
Subtitle B--Testing of Health Information Technology
National Institute for Standards and Technology Testing.
(House bill Sec. 4201; Senate bill Sec. 13201; Conference
agreement Sec. 13201)
Current Law
No provisions; however, ONCHIT is working with the National
Institute for Standards and Technology (NISI) on testing HIT
standards. NIST is assisting with the HITSP standards
harmonization process and with CCHIT's certification
activities.
House Bill
The House bill would require NIST, in coordination with the
HIT Standards Committee, to test HIT standards, as well as
support the establishment of a voluntary testing program by
accredited testing laboratories.
Senate Bill
Same provision.
Conference Agreement
Same provision.
Research and Development Programs. (House bill Sec. 4202;
Senate bill Sec. 13202; Conference agreement Sec. 13202)
Current Law
No provisions.
House Bill
The House bill would require NIST, in consultation with the
National Science Foundation and other federal agencies, to
award competitive grants to universities (or research
consortia) to establish multidisciplinary Centers for Health
Care Information Enterprise Integration. The purpose of the
Centers would be to generate innovative approaches to the
development of a fully interoperable national health care
infrastructure, as well as to develop and use HIT. The bill
requires the National High-Performance Computing Program to
coordinate federal research and development programs related
to the deployment of HIT.
Senate Bill
The Senate would authorize but not require the National
High-Performance Computing Program to review federal research
and development programs relating to the deployment of HIT.
Conference Agreement
The conference agreement has the Senate language with an
amendment. The Conference agreement retains the House and
Senate language directing NIST to award competitive grants to
universities to establish multidisciplinary Centers for
Health Care Information Enterprise Integration. With respect
to the National High-Performance Computing Program, the
agreement notes that the ongoing work of the National
Information Technology Research and Development (NITRD)
program authorized by section 101 of the High-Performance
Computing Act of 1991 (15 U.S.C. 5511) shall include health
information technology research and development.
Subtitle C--Incentives for the Use of Health Information Technology
Part I--Grants and Loans Funding
Grant, Loan, and Demonstration Programs. (House bill Sec.
4301; Senate bill Sec. 13301; Conference agreement Sec.
13301)
Current Law
No provisions; however, since 2004, the Agency for
Healthcare Research and Quality (AHRQ) has awarded $260
million to support and stimulate investment in HIT. AHRQ-
funded projects, many of which are focused on rural and
underserved populations, cover a broad range of HIT tools and
systems including EHRs, personal health records (a term that
refers to health information collected by and under the
control of the patient), e-prescribing, privacy and security,
quality measurement, and Medicaid technical assistance.
House Bill
The House bill would amend PHSA Title XXX (as added by this
Act) by adding a new Subtitle B--Incentives for the Use of
Information Technology.
Sec. 3011. Immediate Funding to Strengthen the Health
Information Technology Infrastructure. The House bill would
require the Secretary, using funds appropriated under Section
3018 and in a manner consistent with the National
Coordinator's strategic plan, to invest in HIT so as to
promote the use and exchange of electronic health
information. The Secretary must, to the greatest extent
practicable, ensure that the funds are used to acquire HIT
that meets current standards and certification criteria.
Funds would be administered through different agencies with
relevant expertise, including ONCHIT, AHRQ, CMS, the Centers
for Disease Control and Prevention (CDC), and the Indian
Health Service (IHS), to support the following: (1) HIT
architecture to support the secure electronic exchange of
information; (2) electronic health records for providers not
eligible for HIT incentive payments under Medicare and
Medicaid; (3) training and dissemination of information on
best practices to integrate HIT into health care delivery;
(4) telemedicine; (5) interoperable clinical data
repositories; (6) technologies and best practices for
protecting health information; and (7) HIT use by public
health departments. The Secretary must invest $300 million to
support regional health information exchanges, and may use
funds to carry out other activities authorized under this Act
and other relevant laws.
Sec. 3012. Health Information Technology Implementation
Assistance. The House bill would require the National
Coordinator, in consultation with NIST and other agencies
with experience in IT services, to establish an HIT extension
program to assist providers in adopting and using certified
EHR technology. The Secretary would be required to create an
HIT Research Center to serve as a forum for exchanging
knowledge and experience, disseminating information on
lessons
[[Page H1433]]
learned and best practices, providing technical assistance to
health information networks, and learning about using HIT in
medically underserved communities.
The Secretary also would be required to support HIT
Regional Extension Centers, affiliated with nonprofit
organizations, to provide assistance to providers in the
region. Priority would be given to public, nonprofit, and
critical access hospitals, community health centers,
individual and small group practices, and entities that serve
the uninsured, underinsured, and medically underserved
individuals. Centers would be permitted to receive up to 4
years of funding to cover up to 50% of their capital and
annual operating and maintenance expenditures. The Secretary
would be required, within 90 days of enactment, to publish a
notice describing the program and the availability of funds.
Each regional center receiving funding would be required to
submit to a biennial evaluation of its performance against
specified objectives. Continued funding after two years of
support would be contingent on receiving a positive
evaluation.
Sec. 3013. State Grants to Promote Health Information
Technology. The National Coordinator would be authorized to
award planning and implementation grants to states or
qualified state-designated entities to facilitate and expand
electronic health information exchange. To qualify as a
state-designated entity, an entity would have to be a
nonprofit organization with broad stakeholder representation
on its governing board and adopt nondiscrimination and
conflict of interest policies. In order to receive an
implementation grant, a state or qualified state-designated
entity would have to submit a plan describing the activities
to be carried out (consistent with the National Coordinator's
strategic plan) to facilitate and expand electronic health
information exchange. The Secretary would be required
annually to evaluate the grant activity under this section
and implement the lessons learned from each evaluation in the
subsequent round of awards in such a manner as to realize the
greatest improvement in health care quality, decrease in
costs, and the most effective and secure electronic
information exchange. Grants would require a match of at
least $1 for each $10 of federal funds in FY2011, at least $1
for each $7 of federal funds in FY2012, and at least $1 for
each $3 of federal funds in FY2013 and each subsequent fiscal
year. For fiscal years before FY2011, the Secretary would
determine whether a state match is required.
Sec. 3104. Competitive Grants to States and Indian Tribes
for the Development of Loan Programs to Facilitate the
Widespread Adoption of Certified EHR Technology. The House
bill would authorize the National Coordinator to award
competitive grants to states or Indian tribes to establish
loan programs for health care providers to purchase certified
EHR technology, train personnel in the use of such
technology, and improve the secure electronic exchange of
health information. To be eligible, grantees would be
required to: (1) establish a qualified HIT loan fund; (2)
submit a strategic plan, updated annually, describing the
intended uses of the funds and providing assurances that
loans will only be given to health care providers that submit
required reports on quality measures and use the certified
EHR technology supported by the loan for the electronic
exchange of health information to improve the quality of
care; and (3) provide matching funds of at least $1 for every
$5 of federal funding. Loans would be repayable over a period
of up to 10 years. Each year, the National Coordinator would
be required to provide a report to Congress summarizing the
annual reports submitted by grantees. Awards would not be
permitted before January 1, 2010.
Sec. 3015. Demonstration Program to Integrate Information
Technology into Clinical Education. The House bill would
authorize the Secretary to create a demonstration program for
awarding competitive grants to medical, dental, and nursing
schools, and to other graduate health education programs to
integrate HIT into the clinical education of health care
professionals. To be eligible, grantees would have to submit
a strategic plan. A grant could not cover more than 50% of
the costs of any activity for which assistance is provided,
though the Secretary would have the authority to waive that
cost-sharing requirement. The Secretary would be required
annually to report to designated House and Senate Committees
on the demonstrations, with recommendations.
Sec. 3016. Information Technology Professionals in Health
Care. The House bill would require the Secretary, in
consultation with the Director of the National Science
Foundation, to provide financial assistance to universities
to establish or expand medical informatics programs. A grant
could not cover more than 50% of the costs of any activity
for which assistance is provided, though the Secretary would
have the authority to waive that cost-sharing requirement.
Sec. 3017. General Grant and Loan Provision. The Secretary
would be permitted to require that grantees, within one year
of receiving an award, report on the effectiveness of the
activities for which the funds were provided and the impact
of the project on health care quality and safety. The House
bill would require the National Coordinator annually to
evaluate the grant activities under this title and implement
the lessons learned from each evaluation in the subsequent
round of awards in such a manner as to realize the greatest
improvement in the quality and efficiency of health care.
Sec. 3018. Authorization for Appropriations. The House bill
would authorize the appropriation of such sums as may be
necessary for each of FY2009 through FY2013 to carry out this
subtitle. Amounts so appropriated would remain available
until expended.
Senate Bill
The Senate bill includes the same provisions as the House
bill, but with the following additional language: (1) the
list of activities for which state implementation grants may
be used includes establishing models that promote lifetime
access to health records; and (2) the use of loan funds by
providers may include upgrading HIT to meet certification
criteria.
Conference Agreement
The Conference report includes the provision from the
Senate that the use of loan funds by providers may include
upgrading HIT to meet certification criteria. The Conference
report does not include the provision from the Senate that
the list of activities for which state implementation grants
may be used includes establishing models that promote
lifetime access to health records.
The Conference report modifies Section 3011 to no longer
include a specific description of $300 million in funding for
promoting regional and sub-national health information
exchange. This funding is reflected in the corresponding
sections of the Economic Recovery and Reinvestment Act that
appropriate funds for activities authorized under this title.
The Conference report modifies Section 3016 to no longer
require matching funds from universities participating in
this program.
As a result of the incentives and appropriations for health
information technology provided in this bill, it is expected
that nonprofit organizations may be formed to facilitate the
electronic use and exchange of health-related information
consistent with standards adopted by HHS, and that such
organizations may seek exemption from income tax as
organizations described in IRC sec. 501(c)(3). Consequently,
if a nonprofit organization otherwise organized and operated
exclusively for exempt purposes described in IRC sec.
501(c)(3) engages in activities to facilitate the electronic
use or exchange of health-related information to advance the
purposes of the bill, consistent with standards adopted by
HHS, such activities will be considered activities that
substantially further an exempt purpose under IRC sec.
501(c)(3), specifically the purpose of lessening the burdens
of government. Private benefit attributable to cost savings
realized from the conduct of such activities will be viewed
as incidental to the accomplishment of the nonprofit
organization's exempt purpose.
Subtitle D--Privacy
Definitions. (House bill Sec. 4400; Senate bill Sec. 13400;
Conference agreement Sec. 13400)
Current Law
Under the Administrative Simplification provisions of the
Health Insurance Portability and Accountability Act of 1996
(HIPAA; P.L. 104-191), Congress set itself a three-year
deadline to enact health information privacy legislation. If,
as turned out to be the case, lawmakers were unable to pass
such legislation before the deadline, the HHS Secretary was
instructed to promulgate regulations containing standards to
protect the privacy of individually identifiable health
information. The HIPAA privacy rule (45 CFR Parts 160, 164)
established a set of patient rights, including the right of
access to one's medical information, and placed certain
limitations on when and how health plans and health care
providers may use and disclose such protected health
information (PHI). Generally, plans and providers may use and
disclose health information for the purpose of treatment,
payment, and other health care operations without the
individual's authorization and with few restrictions. In
certain other circumstances (e.g., disclosures to family
members and friends), the rule requires plans and providers
to give the individual the opportunity to object to the
disclosure. The rule also permits the use and disclosure of
health information without the individual's permission for
various specified activities (e.g., public health oversight,
law enforcement) that are not directly connected to the
treatment of the individual. For all uses and disclosures of
health information that are not otherwise required or
permitted by the rule, plans and providers must obtain a
patient's written authorization.
The HIPAA privacy rule also permits health plans and health
care providers--referred to as HIPAA covered entities--to
share health information with their business associates who
provide a wide variety of functions for them, including
legal, actuarial, accounting, data aggregation, management,
administrative, accreditation, and financial services. A
covered entity is permitted to disclose health information to
a business associate or to allow a business associate to
create or receive health information on its behalf, provided
the covered entity receives satisfactory assurance in the
form of a written contract that the business associate will
appropriately safeguard the information.
[[Page H1434]]
In addition to health information privacy standards,
HIPAA's Administrative Simplification provisions instructed
the Secretary to issue security standards to safeguard PHI in
electronic form against unauthorized access, use, and
disclosure. The security rule (45 CFR Parts 160, 164)
specifies a series of administrative, technical, and physical
security procedures for providers and plans to use to ensure
the confidentiality of electronic health information.
House Bill
The House bill defines the following key privacy and
security terms, in most cases by reference to definitions in
the HIPAA Administrative Simplification standards: breach,
business associate, covered entity, disclose, electronic
health record, electronic medical record, health care
operations, health care provider, health plan, National
Coordinator, payment, personal health record, protected
health information, Secretary, security, state, treatment,
use, and vendor of personal health records.
Senate Bill
Same provision.
Conference Agreement
The Conference report includes some technical modifications
to the definitions.
One set of such modifications is included in the definition
of ``breach''. The Conference report includes a technical
change to clarify that some inadvertent disclosures can
constitute a breach under the meaning of this subtitle. The
conference report clarifies the definition to stipulate that
disclosures (as defined in 45 CFR 164.103) constitute a
breach, except as otherwise provided under the definition.
The definition provides that a disclosure where a person
would not reasonably be able to retain the information
disclosed is not a breach. Also not a breach is any
inadvertent disclosure from an individual who is otherwise
authorized to access protected health information at a
facility operated by a covered entity or business associate
to another similarly situated individual at same facility
provided that any such information received as a result of
such disclosure is not further acquired, accessed, used, or
disclosed without authorization by any person.
Another set of such modifications pertains to the
definition of Personal Health Records. Specifically, the
report clarifies that Personal Health Records are ``managed,
shared, and controlled by or primarily for the individual.''
This technical change clarifies that PHRs include the kinds
of records managed by or for individuals, but does not
include the kinds of records managed by or primarily for
commercial enterprises, such as life insurance companies that
maintain such records for their own business purposes. By
extension, a life insurance company would not be considered a
PHR vendor under this subtitle. A second clarification in the
definition of PHR is the use of the term ``PHR individual
identifiable health information'' (as defined in section
13407(0(2)). In the House and Senate bills, the term
``individually identifiable health information'' was used.
Use of that term would have required that, to be considered a
PHR, an electronic record would have to include information
that was ``created or received by a health care provider,
health plan, employer, or health care clearinghouse.''
However, there is increasing use of electronic records that
contain personal health information that has not been created
or received by a health care provider, health plan, employer,
or health care clearinghouse. Use of the term ``individually
identifiable health information'' would have thus improperly
narrowed the scope of the term Personal Health Record under
this subtitle. Thus, the conference report included the
broader term, PHR individual identifiable health information,
so that the scope of the term Personal Health Record would
properly include electronic records of personal health
information, regardless of whether they have been ``created
or received by a health care provider, health plan, employer,
or health care clearinghouse.''
Part I--Improved Privacy Provisions and Security Provisions
Application of Security Provisions and Penalties to Business
Associates of Covered Entities; Annual Guidance on
Security Provisions. (House bill Sec. 4401; Senate bill
Sec. 13401; Conference agreement Sec. 13401)
Current Law
The Security Rule promulgated pursuant to the Health
Insurance Portability and Accountability Act (HIPAA) include
three sets of safeguards: administrative, physical, and
technical, required of covered entities (providers, health
plans and healthcare clearinghouses). Administrative
safeguards include such functions as assigning or delegating
security responsibilities to employees, as well as security
training requirements. Physical safeguards are intended to
protect electronic systems and data from threats,
environmental hazards, and unauthorized access. Technical
safeguards are primarily IT functions used to protect and
control access to data.
HIPAA permits business associates (those who perform
business functions for covered entities) to create, receive,
maintain or transmit electronic health information on behalf
of that covered entity, provided the covered entity receives
satisfactory assurance in the form of a written contract that
the business associate will implement administrative,
technical, and physical safeguards that reasonably and
appropriately protect the information.
Violations cannot be enforced directly against business
associates. Although providers and health plans are not
liable for, or required to monitor, the actions of their
business associates, if it finds out about a material breach
or violation of the contract by a business associate, it must
take reasonable steps to remedy the situation, and, if
unsuccessful, terminate the contract. If termination is not
feasible, the covered entity must notify HHS.
House Bill
The House bill would apply the HIPAA security standards and
the civil and criminal penalties for violating those
standards to business associates in the same manner as they
apply to the providers and health plans for whom they are
working. It also would require the Secretary, in consultation
with stakeholders, to issue annual guidance on the most
effective and appropriate technical safeguards, including the
technologies that render information unusable, unreadable, or
indecipherable recommended by the HIT Policy Committee, for
protecting electronic health information.
Senate Bill
Same provision, but without any reference to recommended
safeguard technologies standards.
Conference Agreement
The conference agreement includes language contained in the
House bill.
Notification in the Case of Breach. (House bill Sec. 4402;
Senate bill Sec. 13402; Conference agreement Sec. 13402)
Current Law
The Privacy and Security Rules promulgated pursuant to
HIPAA does not require covered entities, providers, health
plans or healthcare clearinghouses, to notify HHS or
individuals of a breach of the privacy, security, or
integrity of their protected health information.
House Bill
In the event of a breach of unsecured PHI that is
discovered by a covered entity, the House bill would require
the covered entity to notify each individual whose
information has been, or is reasonably believed to have been,
accessed, acquired, or disclosed as a result of such breach.
Exceptions to the breach notification requirement are for
unintentional acquisition, access, use or disclosure of
protected health information. For a breach of unsecured PHI
under the control of a business associate, the business
associate upon discovery of the breach would be required to
notify the covered entity. Notice of the breach would have to
be provided to the Secretary and prominent media outlets
serving a particular area if more than 500 individuals in
that area were impacted. If the breach impacted fewer than
500 individuals, the covered entity involved would have to
maintain a log of such breaches and annually submit it to the
Secretary.
The House bill would define unsecured PHI as information
that is not secured through the use of a technology or
methodology identified by the Secretary as rendering the
information unusable, unreadable, and undecipherable to
unauthorized individuals.
The House bill would require the Secretary each year to
report to appropriate committees in Congress on the number
and type of breaches, actions taken in response, and
recommendations made by the National Coordinator on how to
reduce the number of breaches. Within 180 days of enactment,
the Secretary would be required to issue interim final
regulations to implement this section. The provisions in the
section would apply to breaches discovered at least 30 days
after the regulations were published.
Senate Bill
Same provision, but without any reference to recommended
encryption standards in issuing annual guidance on securing
PHI.
Conference Agreement
Similar provision to the House bill with one difference;
notifications in cases of unintentional disclosures would be
required unless such disclosure is to an individual
authorized to access health information at the same facility.
Education on Health Information Privacy. (House bill Sec.
4403; Senate bill Sec. 13403; Conference agreement Sec.
13403)
Current Law
The Privacy Rule promulgated pursuant to HIPAA requires
each covered entity to designate a privacy official for the
development and implementation of its policies and
procedures.
House Bill
Within six months of enactment, the House bill would
require the Secretary to designate a privacy advisor in each
HHS regional office to offer education and guidance to
covered entities and business associates on their federal
health information privacy and security rights and
responsibilities. Within 12 months of enactment, OCR would be
required to develop and maintain a national education program
to educate the public about their privacy rights and the
potential uses of their PHI.
Senate Bill
Same provision.
Conference Agreement
Same provision.
[[Page H1435]]
Application of Privacy Provisions and Penalties to Business
Associates of Covered Entities. (House bill Sec. 4404;
Senate bill Sec. 13404; Conference agreement Sec. 13404)
Current Law
The Privacy Rule promulgated pursuant to HIPAA permits a
covered entity to disclose health information to a business
associate or to allow a business associate to create or
receive health information on its behalf, provided the
covered entity receives satisfactory assurance in the form of
a written contract that the business associate will
appropriately safeguard the information.
Violations cannot be enforced directly against business
associates. Although covered entities are not liable for, or
required to monitor, the actions of their business
associates, if it finds out about a material breach or
violation of the contract by a business associate, it must
take reasonable steps to remedy the situation, and, if
unsuccessful, terminate the contract. If termination is not
feasible, the covered entity must notify HHS.
House Bill
The House bill would apply the HIPAA Privacy Rule, the
additional privacy requirements, and the civil and criminal
penalties for violating those standards to business
associates in the same manner as they apply to the providers
and health plans for whom they are working.
Senate Bill
Same provision.
Conference Agreement
Same provision.
Restrictions on Certain Disclosures and Sales of Health
Information; Accounting of Certain Protected Health
Information Disclosures; Access to Certain Information in
Electronic Format. (House bill Sec. 4405; Senate bill
Sec. 13405; Conference agreement Sec. 13405)
Current Law
The privacy rule established several individual privacy
rights. First, it established a new federal legal right for
individuals to see and obtain a copy of their own PHI in the
form or format requested by the individual, if it is readily
producible in such form or format. If not, then the
information must be provided in hard copy or such form or
format as agreed to by the covered entity and the individual.
The covered entity can impose reasonable, cost-based fees for
providing the information. Second, the rule gives individuals
the right to amend or supplement their own PHI. The covered
entity must act on an individual's request for amendment
within 60 days of receiving the request. That deadline may be
extended up to 30 days. Third, individuals have the right to
request that a covered entity restrict the use and disclosure
of their PHI for the purposes of treatment, payment, or
health care operations. However, the covered entity is not
required to agree to such a restriction unless it has entered
into an agreement to restrict, in which case it must abide by
the agreement. Finally, individuals have the right to an
accounting of disclosures of their PHI by a covered entity
during the previous six years, with certain exceptions. For
example, a covered entity is not required to provide an
accounting of disclosures that have been made to carry out
treatment, payment, and health care operations.
The privacy rule incorporates a minimum necessary standard.
Whenever a covered entity uses or discloses PHI or requests
such information from another covered entity, it must make
reasonable efforts to limit the information to the minimum
necessary to accomplish the intended purpose of the use or
disclosure. There are a number of circumstances in which the
minimum necessary standard does not apply; for example,
disclosures to or requests by a health care provider for
treatment purposes. The rule also permits the disclosure of a
``limited data set'' for certain specified purposes (e.g.,
research), pursuant to a data use agreement with the
recipient. A limited data set, while not meeting the rule's
definition of de-identified information (see below), has most
direct identifiers removed and is considered by HHS to pose a
low privacy risk.
House Bill
The House bill would give individuals the right to receive
an electronic copy of their PHI, if it is maintained in an
electronic health record. Any associated fee charged by the
covered entity could only cover its labor costs for providing
the electronic copy. The bill would require a health care
provider to honor a patient's request that the PHI regarding
a specific health care item or service not be disclosed to a
health plan for purposes of payment or health care
operations, if the patient paid out-of-pocket in full for
that item or service. The House bill also would give an
individual the right to receive an accounting of PHI
disclosures made by covered entities or their business
associates for treatment, payment, and health care operations
during the previous three years, if the disclosures were
through an electronic health record. Within 18 months of
adopting standards on accounting of disclosures (as required
under PHSA Section 3002, as added by Section 4101 of this
Act), the Secretary would be required to issue regulations on
what information shall be collected about each disclosure.
For current users of electronic health records, the
accounting requirements would apply to disclosures made on or
after January 1, 2014. For covered entities yet to acquire
electronic health records, the accounting requirements would
apply to disclosures on or after January 1, 2011, or the date
of electronic health record acquisition, whichever is later.
The House bill would require covered entities to limit the
use, disclosure, or, request of PHI, to the extent
practicable, to a limited data set or, if needed, to the
minimum necessary to accomplish the intended purpose of such
use, disclosure, or request. This requirement would sunset at
such a time as the Secretary issues guidance on what
constitutes minimum necessary. The Secretary would have 18
months to issue such guidance. In addition, the bill would
clarify that the entity disclosing the PHI (as opposed to the
requester) makes the minimum necessary determination. The
HIPAA privacy rule's exceptions to the minimum necessary
standard would continue to apply.
Within 18 months of enactment, the Secretary would be
required to issue regulations to eliminate from the
definition of health care operations those activities that
can reasonably and efficiently be conducted with de-
identified information or that should require authorization
for the use or disclosure of PHI.
The House bill would prohibit the sale of PHI by a covered
entity or business associate without patient authorization
except in certain specified circumstances, such as to recoup
the costs of preparing and transmitting data for public
health or research activities (as defined in the HIPAA
privacy rule), or to provide an individual with a copy of his
or her PHI. Within 18 months of enactment, the Secretary
would be required to issue regulations governing the sale of
PHI.
Finally, the House bill specifies that none of its
provisions would constitute a waiver of any health privacy
privilege otherwise applicable to an individual.
Senate Bill
The Senate bill includes all the same provisions as the
House bill, other than the final provision protecting an
individual's health privacy privileges, but with the
following additional language: (1) in developing guidance on
what constitutes minimum necessary, the Secretary would be
required to take into consideration the information necessary
to improve patient outcomes and to manage chronic disease;
(2) in developing regulations on the accounting of
disclosures through an EHR, the Secretary would be required
to take into account an individual's interest in learning
when the PHI was disclosed and to whom, as well as the cost
of accounting for such disclosures; (3) regarding the
definition of health care operations, the Secretary would be
required to review and evaluate the definition and, to the
extent necessary, eliminate those activities that could
reasonably and efficiently be conducted using de-identified
information or that should require authorization; (4) the
Secretary could not require the use of de-identified
information or require authorization for the use and
disclosure of information for activities within a covered
entity that are described in paragraph one of the definition
of health care operations; and (6) in developing regulation
governing the sale of PHI, the Secretary would be required to
evaluate the impact of charging an amount to cover the costs
of preparing and transmitting data for public health or
research activities.
Conference Agreement
The conference agreement maintains most of these provisions
but makes small modifications. The conference agreement takes
the Senate changes on issuing guidance on what constitutes
minimum necessary and what factors have to be considered. The
conference agreement requires an accounting of disclosures
but has a longer timeframe for allowing providers to come
into compliance with this requirement than the House bill and
shorter than the Senate bill. The requirement to account for
disclosures under this section is prospective. For example, a
covered entity that acquires an electronic health record as
of June 30, 2012 would be required to account for disclosures
made through that electronic health record as of June 30,
2012 and forward. The covered entity would be required to
retain that accounting for a period of three years. Thus, if
an individual requested an accounting for disclosures on June
30, 2015, the covered entity would be required to provide
that accounting for the period of June 30, 2012 to June 30,
2015, with respect to such individual, consistent with the
requirements of Section 13405. However, if an individual
requested an accounting of disclosures on June 30, 2013, the
covered entity would be required to provide such accounting
only for the period of June 30, 2012 to June 30, 2013.
Section 13405(c)(4) of the Senate-passed bill included a
provision allowing the imposition of a reasonable fee for the
accounting for disclosures required under this Section.
However, this statutory provision was duplicative of an
existing provision under 45 CFR 164.528(c)(2) which already
allows for the imposition of a reasonable fee for providing
such accounting, so the provision from the Senate passed bill
was struck.
The conference agreement strikes the provision requiring
the Secretary to review the definition of health care
operations. The conference agreement permits the sale of
protected health information in cases of research but only
limited to costs of preparing and transmitting data. It also
permits the sale of protected health information for public
health activities the Secretary is required to study and
determine whether costs
[[Page H1436]]
should be limited. The conference agreement allows an
individual to request their health information in an
electronic format if it is maintained in such a format for a
reasonable cost based fee as it was in the House and Senate
bills. The conference agreement permits the individual to
designate that the information be sent to another entity or
person. Finally, the conference agreement specifies that none
of its provisions would constitute a waiver of any health
privacy privilege otherwise applicable to an individual, but
moves this provision to section 13421 Relationship to Other
Laws.
Conditions of Certain Contacts as Part of Health Care
Operations. (House bill Sec. 4406; Senate bill Sec.
13406; Conference agreement Sec. 13406)
Current Law
Generally, covered entities may use and disclose health
information for the purpose of treatment, payment, and other
health care operations without the individual's authorization
and with few restrictions. Health care operations are broadly
defined to include quality assessment and improvement
activities, case management and care coordination, evaluation
of health care professionals, underwriting, legal services,
business planning, customer services, grievance resolution,
and fundraising.
Under the Privacy Rule promulgated pursuant to HIPAA, a
covered entity may not disclose health information to a third
party (e.g., pharmaceutical company), in exchange for direct
or indirect remuneration, for the marketing activities of the
third party without first obtaining a patient's
authorization. Similarly, a covered entity may not use or
disclose health information for its own marketing activities
without authorization. Marketing is defined as a
communication about a product or service that encourages the
recipient to purchase or use the product or service. However,
communications made by a covered entity (or its business
associate) to encourage a patient to purchase or use a health
care-related product or service are excluded from this
definition and, therefore, do not require the patient's
authorization, even if the covered entity is paid by a third
party to engage in such activities.
House Bill
The House bill would clarify that a marketing communication
by a covered entity or business associate about a product or
service that encourages the recipient to purchase or use the
product or service may not be considered a health care
operation, unless the communication relates to a health care-
related product or service. Further, it would prohibit a
covered entity or business associate from receiving direct or
indirect payment for marketing a health care-related product
or service without first obtaining the recipient's
authorization. Business associates would be permitted to
receive payment from a covered entity for making any such
communication on behalf of the covered entity that is
consistent with the contract. Fundraising using a patient's
protected health information would not be permitted without a
patient's authorization.
Senate Bill
Like the House bill, the Senate bill would clarify that a
marketing communication by a covered entity or business
associate about a product or service that encourages the
recipient to purchase or use the product or service may not
be considered a health care operation, unless the
communication relates to a health care-related product or
service. Further, the Senate bill states that a communication
about a health care-related product or service would be
permitted as a healthcare operation including where the
covered entity receives payment for making the communications
where (1) the communication only describes a health care item
or service previously prescribed for or administered to the
recipient, or (2) the covered entity or business associate
obtains authorization. Finally, the Senate bill does not
include the House provision on fundraising.
Conference Agreement
The conference agreement retains the general rules about
marketing in both the House and Senate bills. The conference
report makes an exception and allows providers to be paid
reasonable fees as determined by the Secretary to make a
communication to their patients about a drug or biologic that
the patient is currently prescribed. The conference agreement
continues to permit fundraising activities by the provider
using a patient's protected health information so long as any
written fundraising provide an opportunity to opt out of
future fundraising communications. If the recipient chooses
to opt out of future fundraising communications, that choice
is treated as a revocation of authorization under 45 CFR
164.508. All the protections that apply under 45 CFR 164.508
to an individual who has revoked an authorization would thus
apply to a recipient of communications who chooses to opt out
of receiving future fundraising communications, including the
right not to be denied treatment as a result of making that
choice.
Temporary Breach Notification Requirement for Vendors of
Personal Health Records and Other Non-HIPAA Covered
Entities. (House bill Sec. 4407; Senate bill Sec. 13407;
Conference agreement Sec. 13407)
Current Law
There is no Federal law that requires entities to notify
individual when their health information has been breached.
House Bill
The House bill would require personal health record (PHR)
vendors and entities offering products and services through a
PHR vendor's website, upon discovery of a breach of security
of unsecured PHR health information, to notify the
individuals impacted and the FTC. Further, third party
service providers that provide services to PHR vendors and to
other entities offering products and services through a PHR
vendor's website and, as a result, that handle unsecured PHR
health information would, following the discovery of a breach
of security of such information, be required to notify the
vendor or other entity. The requirements in Section 4402 for
the content and timeliness of notifications also would apply
to this section. Unsecured PHR health information means PHR
health information that is not protected through the use of a
technology or methodology specified by the Secretary in
guidance issued pursuant to Section 4402.
The FTC would be required to notify HHS of any breach
notices it received and would given enforcement authority
regarding such breaches of unsecured PHR health information.
Within 180 days, the Secretary would be required to issue
interim final regulations to implement this section. The
provisions in the section would apply to breaches discovered
no sooner than 30 days after the regulations are published.
The provisions in this section would no longer apply to
breaches occurring after HHS or FTC had adopted new privacy
and security standards for non-HIPAA covered entities,
including requirements relating to breach notification.
Senate Bill
The Senate bill includes the same provisions.
Conference Agreement
The conference agreement is the same as the House and
Senate language with minor clarifications. The conference
agreement requires the FTC issue regulations as opposed to
the Secretary of HHS. The conference agreement applies the
breach notification provision to entities that access and
receive health information to and from a personal health
record.
Business Associate Contracts Required for Certain Entities.
(House bill Sec. 4408; Senate bill Sec. 13408; Conference
agreement Sec. 13408)
Current Law
A covered entity (a provider, health plan, of
clearinghouse) is permitted to disclose health information to
a business associate or to allow a business associate to
create or receive health information on its behalf, provided
the covered entity receives satisfactory assurance in the
form of a written contract that the business associate will
appropriately safeguard the information. Current law does not
explicitly include or exclude regional health information
exchanges, regional health information organizations, and
others offering personal health records for a covered entity
from regulation under the Privacy Rule promulgated under
HIPAA.
House Bill
The House bill requires organizations that contract with
covered entities for the purpose of exchanging electronic
health information, for example, Health Information
Exchanges, Regional Health Information Organizations (RHIOs),
and PHR vendors that offer their products through or for a
provider or health plan, to have business associate contracts
with those providers or health plans.
Senate Bill
Same provision.
Conference Agreement
Same provision.
Clarification of Application of Wrongful Disclosures Criminal
Penalties. (House bill Sec. 4409; Senate bill Sec. 13409;
Conference agreement Sec. 13409)
Current Law
The HIPAA criminal penalties include fines of up to
$250,000 and up to 10 years in prison for disclosing or
obtaining health information with the intent to sell,
transfer or use it for commercial advantage, personal gain,
or malicious harm. In July 2005, the Justice Department
Office of Legal Counsel (OLC) addressed which persons may be
prosecuted under HIPAA and concluded that only a covered
entity could be criminally liable.
House Bill
The House bill clarifies that criminal penalties for
wrongful disclosure of PHI apply to individuals who without
authorization obtain or disclose such information maintained
by a covered entity, whether they are employees or not.
Senate Bill
Same provision.
Conference Agreement
Same provision.
Improved Enforcement. (House bill Sec. 4410; Senate bill Sec.
13410; Conference agreement Sec. 13410)
Current Law
HIPAA authorized the Secretary to impose civil monetary
penalties on any person failing to comply with the privacy
and security standards. The maximum civil fine is $100 per
violation and up to $25,000 for all violations of an
identical requirement or prohibition during a calendar year.
Civil monetary penalties may not be imposed if (1) the
violation is a criminal offense under HIPAA's criminal
penalty provisions (see below); (2) the person did not have
actual or constructive knowledge of the violation; or (3) the
[[Page H1437]]
failure to comply was due to reasonable cause and not to
willful neglect, and the failure to comply was corrected
during a 30-day period beginning on the first date the person
liable for the penalty knew, or by exercising reasonable
diligence would have known, that the failure to comply
occurred. For certain wrongful disclosures of PHI, OCR may
refer the case to the Department of Justice for criminal
prosecution. HIPAA's criminal penalties include fines of up
to $250,000 and up to 10 years in prison for disclosing or
obtaining health information with the intent to sell,
transfer or use it for commercial advantage, personal gain,
or malicious harm.
House Bill
The House bill would amend HIPAA to permit OCR to pursue an
investigation and the imposition of civil monetary penalties
against any individual for an alleged criminal violation of
the Privacy and Security Rule of HIPAA if the Justice
Department had not prosecuted the individual. In addition,
the bill would amend HIPAA to require a formal investigation
of complaints and the imposition of civil monetary penalties
for violations due to willful neglect. The Secretary would be
required to issue regulations within 18 months to implement
those amendments. The bill also would require that any civil
monetary penalties collected be transferred to OCR to be used
for enforcing the HIPAA privacy and security standards.
Within 18 months of enactment, GAO would be required to
submit recommendations for giving a percentage of any civil
monetary penalties collected to the individuals harmed. Based
on those recommendations, the Secretary, within three years
of enactment, would be required to establish by regulation a
methodology to distribute a percentage of any collected
penalties to harmed individuals.
The House bill would increase and tier the penalties for
violations of HIPAA. It would preserve the current
requirement that a civil fine not be imposed if the violation
was due to reasonable cause and was corrected within 30 days.
Finally, the House bill would authorize State Attorneys
General to bring a civil action in Federal district court
against individuals who violate the HIPAA privacy and
security standards, in order to enjoin further such violation
and seek damages of up to $100 per violation, capped at
$25,000 for all violations of an identical requirement or
prohibition in any calendar year. State action against a
person would not be permitted if a federal civil action
against that same individual was pending. Nothing in this
section would prevent OCR from continuing to use corrective
action without a penalty in cases where the person did not
know, and by exercising reasonable diligence would not have
known, about the violation.
Senate Bill
Same provision.
Conference Agreement
Same provision.
Audits. (House bill Sec. 4411; Senate bill Sec. 13411;
Conference agreement Sec. 13411)
Current Law
The Secretary is authorized to conduct compliance reviews
to determine whether covered entities are complying with
HIPAA standards.
House Bill
The House bill would require the Secretary to perform
periodic audits to ensure compliance with the Privacy and
Security Rule promulgated pursuant to HIPAA and the
requirements of this subtitle.
Senate Bill
Same provision.
Conference Agreement
Same provision.
Special Rule for Information to Reduce Medication Errors and
Improve Patient Safety. (House bill Sec. 4412)
Current Law
Under the privacy rule, communications made by a covered
entity (or its business associate) to encourage a patient to
purchase or use a health care-related product or service are
excluded from the definition of marketing and, therefore, do
not require the patient's authorization, even if the covered
entity is paid by a third party to engage in such activities.
House Bill
The House bill states that none of the privacy provisions
in the bill would prevent a pharmacist from communicating
with patients to reduce medication errors and improve patient
safety provided there is no remuneration other than for
treatment of the individual and payment for such treatment.
The Secretary would be permitted by regulation to allow
pharmacists to receive reasonable, cost-based payment for
such communications, if it is determined that this would
improve patient care and protect PHI.
Senate Bill
Tile Senate bill does not include this same provision, but
has corresponding limitation in section 13406 of the Senate
bill.
Conference Agreement
The conference agreement does not include this same
provision, but has corresponding limitations in section
13406.
Part H--Relationship to Other Laws; Regulatory References; Effective
Date; Reports
Relationship to Other Laws. (House bill Sec. 4421; Senate
bill Sec. 13421; Conference agreement Sec. 13421)
Current Law
Under Section 1178 of the Social Security Act, as amended
by HIPAA, the security standards preempt any contrary
provision of state law, with certain specified exceptions
(e.g., public health reporting). Pursuant to HIPAA Section
264, however, the privacy rule does not preempt a contrary
provision of state law that is more protective of patient
medical privacy. Psychotherapy notes (i.e., notes recorded by
a mental health professional during counseling) are afforded
special protection under the privacy rule. Almost all uses
and disclosures of such information require patient
authorization.
House Bill
The House bill would apply the preemption provisions in SSA
Section 1178 to the requirements of this subtitle and
preserve the HIPAA privacy and security standards to the
extent that they are consistent with the subtitle. The
Secretary would be required by rulemaking to amend such
standards as necessary to make them consistent with this
subtitle.
Senate Bill
The Senate bill includes the same provisions; with the
additional requirement that the Secretary revise the
definition of psychotherapy notes to include test data that
are part of a mental health evaluation.
Conference Agreement
The conference agreement takes language from the House
bill. The provision related to psychotherapy notes is moved
in the conference report.
Regulatory References. (House bill Sec. 4422; Senate bill
Sec. 13422; Conference agreement Sec. 13422)
Current Law
No provision.
House Bill
The House bill states that each reference in this subtitle
to a federal regulation refers to the most recent version of
the regulation.
Senate Bill
Same provision.
Conference Agreement
Same provision.
Effective Date. (House bill Sec. 4423; Senate bill Sec.
13423; Conference agreement Sec. 13423)
Current Law
No provision.
House Bill
Except as otherwise specifically provided, the provisions
in this subtitle would become effective 12 months after
enactment.
Senate Bill
Same provision.
Conference Agreement
Same provision.
Studies, Reports, Guidance. (House bill Sec. 4424; Senate
bill Sec. 13424; Conference agreement Sec. 13424)
Current Law
Any person who believes a covered entity is not complying
with the privacy rule may file a complaint with HHS. The rule
authorizes the Secretary to conduct investigations to
determine whether covered entities are in compliance. HIPAA
does not require the Secretary to issue a compliance report.
The HIPAA Administrative Simplification standards apply to
individual and group health plans that provide or pay for
medical care; health care clearinghouses (i.e., entities that
facilitate and process the flow of information between health
care providers and payers); and health care providers. In
addition, the privacy and security standards apply to
business associates with whom covered entities share health
information. They do not apply directly to other entities
that collect and maintain health information, including
Health Information Exchanges, RHIOs, and PHR vendors, unless
they are acting as providers or plans.
The HIPAA standards are intended to protect individually
identifiable health information; de-identified information is
not subject to the regulations. Under the privacy rule,
health information is de-identified if 18 specific
identifiers (e.g., name, social security number, address)
have been removed, or if a qualified statistician, using
accepted principles, determines that the risk if very small
that the individual could be identified.
Generally, plans and providers may use and disclose health
information for the purpose of treatment, payment, and other
health care operations without the individual's authorization
and with few restrictions. Covered entities may, but are not
required, to obtain an individual's general consent to use or
disclose PHI for treatment, payment, or health care
operations.
House Bill
The Secretary would be required annually to submit to
specified Congressional Committees and post online a
compliance report containing information on (1) the number
and nature of complaints of alleged violations and how they
were resolved, including the imposition of civil fines, (2)
the number of covered entities receiving technical assistance
in order to achieve compliance, as well as the types of
assistance provided, (3) the number of audits performed and a
summary of their findings, and (4) the Secretary's plan for
the following year for improving compliance with and
enforcement of the HIPAA standards and the provisions of this
subtitle.
The House bill would require the Secretary, within one year
and in consultation
[[Page H1438]]
with the Federal Trade Commission (FTC), to study the
application of health information privacy and security
requirements (including breach notification) to non-HIPAA
covered entities and report the findings to specified House
(Ways and Means, Energy and Commerce) and Senate (Finance,
HELP) Committees. The report should include an examination of
PHR vendors and other entities that offer products and
services through the websites of PHR vendors and covered
entities, provide a determination of which federal agency is
best equipped to enforce new requirements for non-HIPAA
covered entities, and include a time frame for implementing
regulations.
The House bill would require the Secretary, within one year
of enactment and in consultation with stakeholders, to issue
guidance on how best to implement the HIPAA privacy rule's
requirements for de-identifying PHI.
The House bill would require GAO, within one year, to
report to the House Ways and Means and Energy and Commerce
Committees and the Senate Finance Committee on best practices
related to the disclosure of PHI among health care providers
for the purpose of treatment. The report must include an
examination of practices implemented by states and other
entities, such as health information exchanges, and how those
practices improve the quality of care, as well as an
examination of the use of electronic informed consent for
disclosing PHI for treatment, payment, and health care
operations.
Senate Bill
The Senate bill includes the same provisions, with the
additional requirement that GAO, within one year, report to
Congress and the Secretary on the impact of the bill's
privacy provisions on health care costs.
Conference Agreement
The conference agreement maintains most all study language
and add a study to requires the Secretary to review the
definition of ``psychotherapy notes'' with regard to
including test data that are part of a mental health
evaluation. The Secretary may revise the definition by
regulation based on the recommendations of the study. In
addition, the conference agreement broadened the study added
by the Senate on the impact of the bill's privacy provisions
on health care costs. It requires the GAO to study all impact
of all the provisions of the HITECH Act on health care costs,
adoption of electronic health record by providers, and
reductions in medical errors and other quality improvements.
TITLE XIV--STATE FISCAL STABILIZATION FUND
DEPARTMENT OF EDUCATION
STATE FISCAL STABILIZATION FUND
The conference agreement provides $53,600,000,000 for a
State Fiscal Stabilization Fund, instead of $79,000,000,000
as provided by the House and $39,000,000,000 as provided by
the Senate. The conference agreement makes the entire amount
available upon enactment of the bill as proposed by the
Senate. House bill designated half of these funds to become
available on July 1, 2009, and half of the funds to become
available on July 1, 2010. The economic recovery bill
includes these funds in order to provide fiscal relief to the
States to prevent tax increases and cutbacks in critical
education and other services.
GENERAL PROVISIONS--THIS TITLE
Allocations
The conference agreement provides that up to one-half of 1
percent of the State Fiscal Stabilization Fund is allocated
to the outlying areas, based on their respective needs; an
additional $14,000,000 is allocated to the Department of
Education for administration, oversight, and evaluation; and
$5,000,000,000 is reserved for the Secretary of Education for
State Incentive Grants and an Innovation Fund. The agreement
provides that any remaining funds shall be allocated to
States on the following basis: 61 percent based on population
ages 5 through 24 and 39 percent based on total population.
The House and Senate included similar provisions, except that
the House bill provided $15,000,000,000 and the Senate bill
provided $7,500,000,000 for State Incentive Grants and an
Innovation Fund.
State Uses of Funds
The conference agreement requires Governors to use 81.8
percent of their State allocations to support elementary,
secondary, and higher education. Funding received must first
be used to restore State aid to school districts under the
State's primary elementary and secondary education funding
formulae to the greater of the fiscal year 2008 or 2009 level
in each of fiscal years 2009, 2010, and 2011, and, where
applicable, to allow existing formula increases for
elementary and secondary education for fiscal years 2010 and
2011 to be implemented; and to restore State support to
public institutions of higher education to the greater of the
fiscal year 2008 or fiscal year 2009 level, to the extent
feasible given available Stabilization funds. Any remaining
education funds must be allocated to school districts based
on the Federal Title I formula. The conference agreement also
provides that Governors shall use 18.2 percent of State
allocations for public safety and other government services,
which may include education services. These funds may also be
used for elementary, secondary, and higher education
modernization, renovation and repair activities that are
consistent with State laws. The agreement also provides that
Governors shall consider for modernization funding any
institution of higher education in the State that meets
certain criteria.
The House and Senate bills contained similar provisions,
except that the House bill did not provide for Stabilization
funds to be used for existing formula increases for
elementary and secondary education for fiscal years 2010 and
2011, while the Senate bill did not provide Stabilization
funds for a Governor's discretionary fund for public safety
and other government services. Neither House nor Senate bill
provided for the use of these funds for facility
modernization activities.
Uses of Funds by Local Educational Agencies
The conference agreement provides that school districts
receiving Stabilization funds may only use the funds for
activities authorized under the Elementary and Secondary
Education Act (ESEA), the Individuals with Disabilities Act
(IDEA), the Carl D. Perkins Career and Technical Education
Act of 2006 (Perkins), and for school modernization,
renovation, and repair of public school facilities (including
charter schools), which may include modernization,
renovation, and repairs consistent with a recognized green
building rating system. School district modernization
activities must be consistent with State laws.
The House and Senate bills included similar provisions,
except that neither bill permitted funds for capital projects
unless authorized under ESEA, IDEA, or the Perkins Act.
Uses of Funds by Institutions of Higher Education
The conference agreement provides that public institutions
of higher education receiving Stabilization funds must use
these funds for educational and general expenditures, and in
such a way as to mitigate the need to raise tuition and fees,
or for modernization, renovation, or repairs of facilities
that are primarily used for instruction, research, or student
housing. Use of funds for endowments and certain types of
facilities such as athletic stadiums are prohibited. The
House and Senate bills included similar provisions, except
that neither bill permitted funds for higher education
modernization, renovation, or repair projects.
State Applications
The conference agreement requires that Governors shall
submit applications in order to receive Stabilization funds,
which shall include certain assurances, provide baseline data
regarding each of the areas described in such assurances, and
describe how States intend to use their allocations. Such
assurances shall include that the State will: in each of
fiscal years 2009, 2010, and 2011, maintain State support for
elementary, secondary, and public postsecondary education at
least at the levels in fiscal year 2006, and address 4 key
areas: (1) achieve equity in teacher distribution, (2)
establish a longitudinal data system that includes the
elements described in the America COMPETES Act, (3) enhance
the quality of academic assessments relating to English
language learners and students with disabilities, and improve
State academic content standards and student academic
achievement standards, and (4) ensure compliance with
corrective actions required for low-performing schools. The
agreement further provides that, in order to receive an
Incentive Grant, a Governor shall: submit an application that
describes the State's progress in each of the assurances and
how the State would use grant funding to continue making
progress toward meeting the State's student academic
achievement standards. The House and Senate bills contained
similar provisions, except both bills included slightly
difference requirements pertaining to assurances.
State Incentive Grants
The conference agreement authorizes the Secretary of
Education to award, in fiscal year 2010, Incentive Grants to
States that have made significant progress in achieving
equity in teacher distribution, establishing a longitudinal
data system, and enhancing assessments for English language
learners and students with disabilities. Each State receiving
an Incentive Grant shall use at least 50 percent of its grant
to provide school districts with subgrants based on their
most recent relative Title I allocations. The House and
Senate bills included similar provisions.
Innovation Fund
The conference agreement authorizes up to $650,000,000 for
an Innovation Fund, awarded by the Secretary of Education,
which shall consist of academic achievement awards to
recognize school districts, or partnerships between nonprofit
organizations and State educational agencies, school
districts, or one or more schools that have made achievement
gains. The House and Senate bills included similar
provisions.
State Reports
The conference agreement requires that a State receiving
Stabilization funds shall submit an annual report to the
Secretary describing the uses of funds provided within the
State; the distribution of funds received; the number of jobs
saved or created; tax increases averted; the State's progress
in reducing inequities in the distribution of highly-
qualified teachers, developing a longitudinal data system,
and implementing valid assessments; actions taken to limit
tuition and fee increases at public institutions of higher
education; and the extent to which public institutions of
higher education maintained, increased, or decreased
enrollments
[[Page H1439]]
of in-State students. The House and Senate bills included
similar provisions.
Evaluation
The conference agreement requires the Government
Accountability Office to conduct evaluations of the programs
under this title, which shall include, but not be limited to,
the impact of the funding provided on the progress made
toward closing achievement gaps. The House and Senate bills
included identical provisions.
Secretary's Report to Congress
The conference agreement provides that the Secretary of
Education shall submit a report to certain committees of the
House of Representatives and the Senate that evaluates the
information provided in the State reports submitted under
section 14008. The House and Senate bills included identical
provisions.
Prohibition on Provision of Certain Assistance
The conference agreement provides that no recipient of
funds under this title shall use such funds to provide
financial assistance to students to attend private elementary
or secondary schools, except provided in section 14003. The
House and Senate bills included similar provisions, although
the House bill did not include such exception.
Fiscal Relief
The conference agreement provides that the Secretary of
Education may waive or modify any requirement of this title
relating to maintenance of effort, for States and school
districts that have experienced a precipitous decline in
financial resources. In granting such a waiver, the Secretary
shall determine that the State or school district will
maintain the proportionate share of total revenues for
elementary and secondary education as in the preceding fiscal
year. The House bill did not include a similar provision. The
Senate bill included different provisions to waive
maintenance of effort and the use of Federal funds to
supplement, not supplant, non-Federal funds.
Definitions
The conference agreement defines certain terms used in this
title. The House and Senate bills included nearly identical
provisions.
TITLE XV--ACCOUNTABILITY AND TRANSPARENCY
Sec. 1501. Definitions.--The conference agreement includes
a section providing various definitions for purposes of this
title, as proposed by the Senate.
Subtitle A--Transparency and Oversight Requirements
Sec. 1511. Certifications.--With respect to funds under
this Act made available to state or local governments for
infrastructure investments, the conference agreement requires
a certification from the governor, mayor or other chief
executive that the project in question has received the full
review and vetting required by law and is an appropriate use
of taxpayer dollars. This is a modification of provisions
contained in both the House and Senate versions of this
legislation.
Sec. 1512. Reports on Use of Funds.--The conference
agreement requires reporting of various matters by
governments and organizations receiving funds from the
Federal government under this Act, including amounts
received, projects or activities for which the funds are to
be used, estimated numbers of jobs created or retained, and
information regarding subcontracts and subgrants. This is a
modification of provisions in the House and Senate bills.
Sec. 1513. Reports of the Council of Economic Advisors.--
The conference report requires quarterly reports from the
Council of Economic Advisors regarding the estimated impact
of this Act on employment, economic growth, and other key
economic indicators. Similar provisions were proposed by the
House and the Senate.
Sec. 1514. Inspector General Reviews.--The conference
report includes a modified version of a House provision
requiring agency inspectors general to review any concerns
raised by the public about specific investments using funds
made available in this Act, and to relay findings of their
reviews to the head of the agency concerned. Subsection (b)
of the House provision, relating to inspector general access
to records, has been deleted because the matter is addressed
more comprehensively in section 1515 of the conference
report.
Sec. 1515. Inspector General Access to Records.--The
agreement includes a modification of a House provision
authorizing agency inspectors general to examine records and
interview employees of contractors and grantees receiving
funds under this Act. The House provision related only to
contractors but applied to the Government Accountability
Office (GAO) as well as inspectors general. GAO access is
addressed in a separate provision in the Legislative Branch
title of this conference report.
Subtitle B--Recovery Accountability and Transparency Board
Sec. 1521. Establishment of Board.--The conference
agreement, like the House and Senate bills, establishes a
Recovery Accountability and Transparency Board to coordinate
and conduct oversight of Federal spending under this Act to
prevent fraud, waste, and abuse.
Sec. 1522. Composition of Board.--The conference agreement
specifies that the Board shall be chaired by an individual to
be designated by the President, and shall consist of
inspectors general of certain specified agencies and such
others as the President may designate. This is quite similar
to the Senate provision. The House version called for a
somewhat smaller Board chaired by the President's Chief
Performance Officer and made up of a combination of
inspectors general and agency deputy secretaries.
Secs. 1523 through 1525. Board Functions, Powers and
Personnel.--These sections of the conference report, which
generally follow the Senate provisions, set out the functions
and powers of the Board and provide various authorities
related to personnel, details, and information and assistance
from other Federal agencies.
Sec. 1526. Board Website.--The conference report requires
the Board to establish a website to foster greater
accountability and transparency in use of funds in this Act,
and specifies a number of categories of information to be
posted on that website. This is a modification of language
from both the House and the Senate.
Sec. 1527. Independence of Inspectors General.--Like the
House and Senate bills, the conference report specifies that
it is not intended to affect the independent authority of
inspectors general as to whether to conduct audits or
investigations of funds under this Act, but requires an
inspector general (IG) which rejects a Board recommendation
regarding investigations to submit a report to the Board, the
agency head, and congressional committees stating the reasons
for that action. The conference report adds language
clarifying that the decision of an IG is to be final.
Sec. 1529. Authorization of Appropriations.--The conference
report, like the Senate bill, authorizes appropriations of
such sums as may be necessary for the Board. The House
version did not contain an explicit authorization, but did
make an appropriation. In the conference report, an
appropriation for the Board is contained in the Financial
Services and General Government title.
The conferees note that funding appropriated to the Board
will support activities related to accountability,
transparency, and oversight of spending under the Act.
``Funds may be transferred to support the operations of the
Recovery Independent Advisory Panel established under section
1541 of the Act and for technical and administrative services
and support provided by the General Services
Administration.<greek-m> Funds may also be transferred to the
Office of Management and Budget for coordinating and
overseeing the implementation of the reporting requirements
established under section 1526 of the Act.''
Sec. 1530. Termination of the Board.--The conference report
terminates the Board on September 30, 2013--one year later
than proposed by the Senate. The House proposed to terminate
the Board 1 year after 90 percent of funds appropriated in
this Act have been spent.
Subtitle C--Recovery Independent Advisory Panel
Secs. 1541 through 1546. Independent Advisory Panel.--Like
both the House and Senate bills, the conference report
establishes an Independent Advisory Panel to advise the
Board. The conference report is very similar to the Senate
version.
Subtitle D--Additional Accountability and Transparency Requirements
Sec. 1551. Authority To Establish Separate Funding
Accounts.--The conference agreement contains new language
requiring funds appropriated in this Act to be made available
in separate Treasury accounts to facilitate tracking of these
funds, unless a waiver is granted by the Director of the
Office of Management and Budget.
Sec. 1552. Set-Aside for State and Local Government
Reporting and Recordkeeping.--The conference agreement
includes new language allowing agencies, after notice and
comment rulemaking, to reasonably adjust limits on
administrative expenditures for Federal grants to help
recipients defray costs of data collection requirements under
this Act.
Sec. 1553. Protecting State and Local Government and
Contractor Whistleblowers.--The conference agreement includes
language providing new protections against reprisals for
employees of State and local governments or private
contractors who disclose to Federal officials information
reasonably believed to be evidence of gross mismanagement,
gross waste, or violations of law related to contracts or
grants using funds in this Act. This is a modification of
provisions appearing in both versions of the legislation.
Among other things, the conference version modifies time
limits on investigations of complaints and clarifies the
burden of proof required to establish violations.
Sec. 1554. Special Contracting Provisions.--The conference
report includes a modification of a provision proposed by the
House specifying that, to the maximum extent feasible,
contracts using funds in this Act shall be awarded as fixed-
price contracts and through competitive procedures.
Protection for Federal Whistleblowers.--The conference
report does not include language proposed by the House
relating to protections for Federal employee whistleblowers.
TITLE--XVI GENERAL PROVISIONS--THIS ACT
Section 1601 provides that each amount appropriated or made
available in this Act is in addition to amounts otherwise
appropriated
[[Page H1440]]
for the fiscal year involved. Further, enactment of this Act
shall have no effect on the availability of amounts under the
continuing resolution for fiscal year 2009.
Section 1602 provides for quick-start activities. For
infrastructure investment funds, recipients of funds provided
in this Act should give preference to activities that can be
started and completed expeditiously, with a goal of using at
least 50 percent for activities that can be initiated within
120 days of enactment. Also recipients should use grant funds
in a manner that maximizes job creation and economic benefit.
Section 1603 provides that funds appropriated in this Act
shall be available until September 30, 2010, unless expressly
provided otherwise in this Act.
Section 1604 prohibits the use of funds for particular
activities.
Section 1605 provides for the use of American iron, steel
and manufactured goods, except in certain instances. Section
1605(d) is not intended to repeal by implication the
President's authority under Title III of the Trade Agreements
Act of 1979. The conferees anticipate that the Administration
will rely on the authority under 19 U.S.C. 2511(b) to the
extent necessary to comply with U.S. obligations under the
WTO Agreement on Government Procurement and under U.S. free
trade agreements and so that section 1605 will not apply to
least developed countries to the same extent that it does not
apply to the parties to those international agreements. The
conferees also note that waiver authority under section
2511(b)(2) has not been used.
Section 1606 provides for specific wage rate requirements.
All laborers and mechanics employed by contractors and
subcontractors on projects funded directly by or assisted in
whole or in part by and through the Federal government
pursuant to this Act shall be paid not less than the wages
prevailing in the locality for similar projects as determined
by the Secretary of Labor in accordance with the Davis-Bacon
Act.
Section 1607 provides additional funding distribution and
assurance of the appropriate use of funds. Not later than 45
days after the enactment of this Act, the governor of each
state shall certify that the state will request and use funds
provided by this Act to the state and its agencies. If funds
made available to a state in any division of this Act are not
accepted for use by its governor, then acceptance by the
state legislature, by adoption of a concurrent resolution,
shall be sufficient to provide funding to the state. After
adoption of a concurrent resolution, funding to the State
will be for distribution to local governments, councils of
governments, public entities, and public-private entities
within the State, either by formula or at the State's
discretion.
Section 1608 amends section 107(b) of the Emergency
Economic Stabilization Act of 2008 (relating to contracting
procedures) to include individuals with disabilities and
businesses owned by such individuals.
Section 1609 makes various findings regarding the National
Environmental Policy Act (NEPA). In addition, this section
provides that adequate resources within this Act must be
devoted to ensuring that NEPA reviews are completed
expeditiously. The President shall report quarterly to the
appropriate congressional committees regarding NEPA
requirements and documentation for projects funded in this
Act.
Section 1610 prohibits the use of funds for contracts and
grants not awarded in accordance with the Federal Property
and Administration Services Act, or chapter 137 of title 10,
United States Code and Federal Acquisition Regulation, or as
otherwise authorized by statute. The provision is not
intended to override other specific statutory authorizations
for procurements, including the Small Business Act and the
Javits-Wagner-O'Day Act.
Section 1611 provides that it shall be unlawful for any
recipient of funding of Title I of the Emergency Economic
Stabilization Act of 2008 or section 13 of the Federal
Reserve Act to hire any nonimmigrant described in section
101(a)(15)(h)(i)(b) of the Immigration and Nationality Act
unless the recipient is in compliance with the requirements
for an.H-1B dependent employer as defined in that Act. This
requirement is effective for a two-year period beginning on
the date of enactment of this Act.
Section 1612 provides limited transfer authority. The
conferees recognize the challenges that the Administration
will face in determining how best to respond to the current
economic crisis. Accordingly, the Senate and House passed
bills each included permissive authority to reprogram or
transfer funds within certain agencies and programs to
mitigate these concerns.
It is clearly understood that as the Administration
attempts to find the best means to respond to the crisis, the
priority and utility of different programs could shift. As
such, the conferees have agreed to provide authority during
current fiscal year for Agency heads to transfer up to 1% of
certain funds within their jurisdiction from the amounts
provided in this Act. The conferees do not intend for this 1%
transfer provision to either nullify or expand upon the
transfer authorities provided for selected agencies and
programs elsewhere in this Act. The Committees on
Appropriations intend to carefully monitor the use of this
authority and expect Agency heads to exercise its use in
accordance with established reprogramming practices and only
after consulting with the Committees on Appropriations before
pursuing any transfer.
The conference agreement does not include the following
provisions proposed by the House: requirements for timely
award of grants; use it or lose it requirements for grantees;
set-asides for management and oversight; as these issues'
have been addressed, in certain circumstances, within the
appropriate appropriating paragraphs. In addition, the
conference agreement does not include the following
provisions proposed by the House: requirements regarding
funding for the State of Illinois; and requirements for
participation in E-Verify.
Conference Total--With Comparisons
The total new budget (obligational) authority for the
fiscal year 2009 recommended by the Committee of Conference,
comparisons to the House and Senate bills for 2009 follow:
[in thousands of dollars]
House bill, fiscal year 2009.......................... 361,038,500
Senate bill, fiscal year 2009......................... 289,794,425
Conference agreement, fiscal year 2009................ 311,197,500
Conference agreement compared with:...................
House bill, fiscal year 2009........................ -49,841,000
Senate bill, fiscal year 2009....................... +21,403,075
DIVISION B--TAX, UNEMPLOYMENT, HEALTH, STATE FISCAL RELIEF, AND OTHER
PROVISIONS
TITLE I--TAX PROVISIONS
A. Tax Relief for Individuals and Families
1. Making Work Pay Credit (sec. 1001 of the House bill, sec.
1001 of the Senate amendment, sec. 1001 of the conference
agreement, and new sec. 36A of the Code)
Present Law
Earned income tax credit
Low- and moderate-income workers may be eligible for the
refundable earned income tax credit (``EITC''). Eligibility
for the EITC is based on earned income, adjusted gross
income, investment income, filing status, and immigration and
work status in the United States. The amount of the EITC is
based on the presence and number of qualifying children in
the worker's family, as well as on adjusted gross income and
earned income.
The EITC generally equals a specified percentage of earned
income \1\ up to a maximum dollar amount. The maximum amount
applies over a certain income range and then diminishes to
zero over a specified phaseout range. For taxpayers with
earned income (or adjusted gross income (``AGI''), if
greater) in excess of the beginning of the phaseout range,
the maximum EITC amount is reduced by the phaseout rate
multiplied by the amount of earned income (or AGI, if
greater) in excess of the beginning of the phaseout range.
For taxpayers with earned income (or AGI, if greater) in
excess of the end of the phaseout range, no credit is
allowed.
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\1\ Earned income is defined as (1) wages, salaries, tips,
and other employee compensation, but only if such amounts are
includible in gross income, plus (2) the amount of the
individual's net self-employment earnings.
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The EITC is a refundable credit, meaning that if the amount
of the credit exceeds the taxpayer's Federal income tax
liability, the excess is payable to the taxpayer as a direct
transfer payment. Under an advance payment system, eligible
taxpayers may elect to receive the credit in their paychecks,
rather than waiting to claim a refund on their tax returns
filed by April 15 of the following year.
Child credit
An individual may claim a tax credit for each qualifying
child under the age of 17. The amount of the credit per child
is $1,000 through 2010 and $500 thereafter. A child who is
not a citizen, national, or resident of the United States
cannot be a qualifying child.
The credit is phased out for individuals with income over
certain threshold amounts. Specifically, the otherwise
allowable child tax credit is reduced by $50 for each $1,000
(or fraction thereof) of modified adjusted gross income over
$75,000 for single individuals or heads of households,
$110,000 for married individuals filing joint returns, and
$55,000 for married individuals filing separate returns. For
purposes of this limitation, modified adjusted gross income
includes certain otherwise excludable income earned by U.S.
citizens or residents living abroad or in certain U.S.
territories.
[[Page H1441]]
The credit is allowable against the regular tax and the
alternative minimum tax. To the extent the child credit
exceeds the taxpayer's tax liability, the taxpayer is
eligible for a refundable credit (the additional child tax
credit) equal to 15 percent of earned income in excess of a
threshold dollar amount (the ``earned income'' formula). The
threshold dollar amount is $12,550 (for 2009), and is indexed
for inflation.
Families with three or more children may determine the
additional child tax credit using the ``alternative
formula,'' if this results in a larger credit than determined
under the earned income formula. Under the alternative
formula, the additional child tax credit equals the amount by
which the taxpayer's social security taxes exceed the
taxpayer's earned income tax credit.
Earned income is defined as the sum of wages, salaries,
tips, and other taxable employee compensation plus net self-
employment earnings. Unlike the EITC, which also includes the
preceding items in its definition of earned income, the
additional child tax credit is based only on earned income to
the extent it is included in computing taxable income. For
example, some ministers' parsonage allowances are considered
self-employment income, and thus are considered earned income
for purposes of computing the EITC, but the allowances are
excluded from gross income for individual income tax
purposes, and thus are not considered earned income for
purposes of the additional child tax credit.
House Bill
In general
The provision provides eligible individuals a refundable
income tax credit for two years (taxable years beginning in
2009 and 2010).
The credit is the lesser of (1) 6.2 percent of an
individual's earned income or (2) $500 ($1,000 in the case of
a joint return). For these purposes, the earned income
definition is the same as for the earned income tax credit
with two modifications. First, earned income for these
purposes does not include net earnings from self-employment
which are not taken into account in computing taxable income.
Second, earned income for these purposes includes combat pay
excluded from gross income under section 112.\2\
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\2\ Unless otherwise stated, all section references are to
the Internal Revenue Code of 1986, as amended (the ``Code'').
---------------------------------------------------------------------------
The credit is phased out at a rate of two percent of the
eligible individual's modified adjusted gross income above
$75,000 ($150,000 in the case of a joint return). For these
purposes an eligible individual's modified adjusted gross
income is the eligible individual's adjusted gross income
increased by any amount excluded from gross income under
sections 911, 931, or 933. An eligible individual means any
individual other than: (1) a nonresident alien; (2) an
individual with respect to whom another individual may claim
a dependency deduction for a taxable year beginning in a
calendar year in which the eligible individual's taxable year
begins; and (3) an estate or trust. Each eligible individual
must satisfy identical taxpayer identification number
requirements to those applicable to the earned income tax
credit.
Treatment of the U.S. possessions
Mirror code possessions \3\
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\3\ Possessions with mirror code tax systems are the United
States Virgin Islands, Guam, and the Commonwealth of the
Northern Mariana Islands.
---------------------------------------------------------------------------
The U.S. Treasury will make payments to each mirror code
possession in an amount equal to the aggregate amount of the
credits allowable by reason of the provision to that
possession's residents against its income tax. This amount
will be determined by the Treasury Secretary based on
information provided by the government of the respective
possession. For purposes of these payments, a possession is a
mirror code possession if the income tax liability of
residents of the possession under that possession's income
tax system is determined by reference to the U.S. income tax
laws as if the possession were the United States.
Non-mirror code possessions \4\
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\4\ Possessions that do not have mirror code tax systems are
Puerto Rico and American Samoa.
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To each possession that does not have a mirror code tax
system, the U.S. Treasury will make two payments (for 2009
and 2010, respectively) in an amount estimated by the
Secretary as being equal to the aggregate credits that would
have been allowed to residents of that possession if a mirror
code tax system had been in effect in that possession.
Accordingly, the amount of each payment to a non-mirror Code
possession will be an estimate of the aggregate amount of the
credits that would be allowed to the possession's residents
if the credit provided by the provision to U.S. residents
were provided by the possession to its residents. This
payment will not be made to any U.S. possession unless that
possession has a plan that has been approved by the Secretary
under which the possession will promptly distribute the
payment to its residents.
General rules
No credit against U.S. income tax is permitted under the
provision for any person to whom a credit is allowed against
possession income taxes as a result of the provision (for
example, under that possession's mirror income tax).
Similarly, no credit against U.S. income tax is permitted for
any person who is eligible for a payment under a non-mirror
code possession's plan for distributing to its residents the
payment described above from the U.S. Treasury.
For purposes of the payments to the possessions, the
Commonwealth of Puerto Rico and the Commonwealth of the
Northern Mariana Islands are considered possessions of the
United States.
For purposes of the rule permitting the Treasury Secretary
to disburse appropriated amounts for refunds due from certain
credit provisions of the Internal Revenue Code of 1986, the
payments required to be made to possessions under the
provision are treated in the same manner as a refund due from
the credit allowed under the provision.
Federal programs or Federally-assisted programs
Any credit or refund allowed or made to an individual under
this provision (including to any resident of a U.S.
possession) is not taken into account as income and shall not
be taken into account as resources for the month of receipt
and the following two months for purposes of determining
eligibility of such individual or any other individual for
benefits or assistance, or the amount or extent of benefits
or assistance, under any Federal program or under any State
or local program financed in whole or in part with Federal
funds.
Income tax withholding
Taxpayers' reduced tax liability under the provision shall
be expeditiously implemented through revised income tax
withholding schedules produced by the Internal Revenue
Service. These revised income tax withholding schedules
should be designed to reduce taxpayers' income tax withheld
for each remaining pay period in the remainder of 2009 by an
amount equal to the amount that withholding would have been
reduced had the provision been reflected in the income tax
withholding schedules for the entire taxable year.
Effective date
The provision applies to taxable years beginning after
December 31, 2008.
Senate Amendment
In general
The Senate is the same as the House bill, except that the
credit is phased out at a rate of four percent (rather than
two percent) of the eligible individual's modified adjusted
gross income above $70,000 ($140,000 in the case of a joint
return).
Also, the Senate amendment provides that the otherwise
allowable credit allowed under the provision is reduced by
the amount of any payment received by the taxpayer pursuant
to the provisions of the bill providing economic recovery
payments under the Veterans Administration, Railroad
Retirement Board, and the Social Security Administration. The
provision treats the failure to reduce the credit by the
amount of these payments, and the omission of the correct
TIN, as clerical errors. This allows the IRS to assess any
tax resulting from such failure or omission without the
requirement to send the taxpayer a notice of deficiency
allowing the taxpayer the right to file a petition with the
Tax Court.
Income tax withholding
The Senate amendment also provides for a more accelerated
delivery of the credit in 2009 through revised income tax
withholding schedules produced by the Department of the
Treasury.
Under the Senate amendment, these revised income tax
withholding schedules would be designed to reduce taxpayers'
income tax withheld for the remainder of 2009 in such a
manner that the full annual benefit of the provision is
reflected in income tax withheld during the remainder of
2009.
Conference Agreement
In general
The provision provides eligible individuals a refundable
income tax credit for two years (taxable years beginning in
2009 and 2010).
The credit is the lesser of (1) 6.2 percent of an
individual's earned income or (2) $400 ($800 in the case of a
joint return). For these purposes, the earned income
definition is the same as for the earned income tax credit
with two modifications. First, earned income for these
purposes does not include net earnings from self-employment
which are not taken into account in computing taxable income.
Second, earned income for these purposes includes combat pay
excluded from gross income under section 112.
The credit is phased out at a rate of two percent of the
eligible individual's modified adjusted gross income above
$75,000 ($150,000 in the case of a joint return). For these
purposes an eligible individual's modified adjusted gross
income is the eligible individual's adjusted gross income
increased by any amount excluded from gross income under
sections 911, 931, or 933. An eligible individual means any
individual other than: (1) a nonresident alien; (2) an
individual with respect to whom another individual may claim
a dependency deduction for a taxable year beginning in a
calendar year in which the eligible individual's taxable year
begins; and (3) an estate or trust.
Also, the conference agreement provides that the otherwise
allowable making work pay credit allowed under the provision
is reduced by the amount of any payment received by the
taxpayer pursuant to the provisions of the bill providing
economic recovery payments under the Veterans Administration,
Railroad Retirement Board, and the
[[Page H1442]]
Social Security Administration and a temporary refundable tax
credit for certain government retirees.\5\ The conference
agreement treats the failure to reduce the making work pay
credit by the amount of such payments or credit, and the
omission of the correct TIN, as clerical errors. This allows
the IRS to assess any tax resulting from such failure or
omission without the requirement to send the taxpayer a
notice of deficiency allowing the taxpayer the right to file
a petition with the Tax Court.
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\5\ The credit for certain government employees is available
for 2009. The credit is $250 ($500 for a joint return where
both spouses are eligible individuals). An eligible
individual for these purposes is an individual: (1) who
receives an amount as a pension or annuity for service
performed in the employ of the United States or any State or
any instrumentality thereof, which is not considered
employment for purposes of Social Security taxes; and (2) who
does not receive an economic recovery payment under the
Veterans Administration, Railroad Retirement Board, or the
Social Security Administration.
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Each tax return on which this credit is claimed must
include the social security number of the taxpayer (in the
case of a joint return, the social security number of at
least one spouse).
Treatment of the U.S. possessions
The conference agreement follows the House bill and the
Senate amendment.
Federal programs or Federally-assisted programs
The conference agreement follows the House bill and the
Senate amendment.
Income tax withholding
The conference agreement follows the Senate amendment.
Effective date
The provision applies to taxable years beginning after
December 31, 2008.
2. Increase in the earned income tax credit (sec. 1101 of the
House bill, sec. 1002 of the Senate amendment, sec. 1002
of the conference agreement, and sec. 32 of the Code)
Present Law
Overview
Low- and moderate-income workers may be eligible for the
refundable earned income tax credit (``EITC''). Eligibility
for the EITC is based on earned income, adjusted gross
income, investment income, filing status, and immigration and
work status in the United States. The amount of the EITC is
based on the presence and number of qualifying children in
the worker's family, as well as on adjusted gross income and
earned income.
The EITC generally equals a specified percentage of earned
income \6\ up to a maximum dollar amount. The maximum amount
applies over a certain income range and then diminishes to
zero over a specified phaseout range. For taxpayers with
earned income (or adjusted gross income (AGI), if greater) in
excess of the beginning of the phaseout range, the maximum
EITC amount is reduced by the phaseout rate multiplied by the
amount of earned income (or AGI, if greater) in excess of the
beginning of the phaseout range. For taxpayers with earned
income (or AGI, if greater) in excess of the end of the
phaseout range, no credit is allowed.
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\6\ Earned income is defined as (1) wages, salaries, tips,
and other employee compensation, but only if such amounts are
includible in gross income, plus (2) the amount of the
individual's net self-employment earnings.
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An individual is not eligible for the EITC if the aggregate
amount of disqualified income of the taxpayer for the taxable
year exceeds $3,100 (for 2009). This threshold is indexed for
inflation. Disqualified income is the sum of: (1) interest
(taxable and tax exempt); (2) dividends; (3) net rent and
royalty income (if greater than zero); (4) capital gains net
income; and (5) net passive income (if greater than zero)
that is not self-employment income.
The EITC is a refundable credit, meaning that if the amount
of the credit exceeds the taxpayer's Federal income tax
liability, the excess is payable to the taxpayer as a direct
transfer payment. Under an advance payment system, eligible
taxpayers may elect to receive the credit in their paychecks,
rather than waiting to claim a refund on their tax returns
filed by April 15 of the following year.
Filing status
An unmarried individual may claim the EITC if he or she
files as a single filer or as a head of household. Married
individuals generally may not claim the EITC unless they file
jointly. An exception to the joint return filing requirement
applies to certain spouses who are separated. Under this
exception, a married taxpayer who is separated from his or
her spouse for the last six months of the taxable year shall
not be considered as married (and, accordingly, may file a
return as head of household and claim the EITC), provided
that the taxpayer maintains a household that constitutes the
principal place of abode for a dependent child (including a
son, stepson, daughter, stepdaughter, adopted child, or a
foster child) for over half the taxable year,\7\ and pays
over half the cost of maintaining the household in which he
or she resides with the child during the year.
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\7\ A foster child must reside with the taxpayer for the
entire taxable year.
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Presence of qualifying children and amount of the earned
income credit
Three separate credit schedules apply: one schedule for
taxpayers with no qualifying children, one schedule for
taxpayers with no qualifying child, and one schedule for
taxpayers with more than one qualifying child.\8\
---------------------------------------------------------------------------
\8\ All income thresholds are indexed for inflation annually.
---------------------------------------------------------------------------
Taxpayers with no qualifying children may claim a credit if
they are over age 24 and below age 65. The credit is 7.65
percent of earnings up to $5,970, resulting in a maximum
credit of $457 for 2009. The maximum is available for those
with incomes between $5,970 and $7,470 ($10,590 if married
filing jointly). The credit begins to phase down at a rate of
7.65 percent of earnings above $7,470 ($10,590 if married
filing jointly) resulting in a $0 credit at $13,440 of
earnings ($16,560 if married filing jointly).
Taxpayers with one qualifying child may claim a credit in
2009 of 34 percent of their earnings up to $8,950, resulting
in a maximum credit of $3,043. The maximum credit is
available for those with earnings between $8,950 and $16,420
($19,540 if married filing jointly). The credit begins to
phase down at a rate of 15.98 percent of earnings above
$16,420 ($19,540 if married filing jointly). The credit is
phased down to $0 at $35,463 of earnings ($38,583 if married
filing jointly).
Taxpayers with more than one qualifying child may claim a
credit in 2009 of 40 percent of earnings up to $12,570,
resulting in a maximum credit of $5,028. The maximum credit
is available for those with earnings between $12,570 and
$16,420 ($19,540 if married filing jointly). The credit
begins to phase down at a rate of 21.06 percent of earnings
above $16,420 ($19,540 if married filing jointly). The credit
is phased down to $0 at $40,295 of earnings ($43,415 if
married filing jointly).
If more than one taxpayer lives with a qualifying child,
only one of these taxpayers may claim the child for purposes
of the EITC. If multiple eligible taxpayers actually claim
the same qualifying child, then a tiebreaker rule determines
which taxpayer is entitled to the EITC with respect to the
qualifying child. Any eligible taxpayer with at least one
qualifying child who does not claim the EITC with respect to
qualifying children due to failure to meet certain
identification requirements with respect to such children
(i.e., providing the name, age and taxpayer identification
number of each of such children) may not claim the EITC for
taxpayers without qualifying children.
House Bill
Three or more qualifying children
The provision increases the EITC credit percentage for
families with three or more qualifying children to 45 percent
for 2009 and 2010. For example, in 2009 taxpayers with three
or more qualifying children may claim a credit of 45 percent
of earnings up to $12,570, resulting in a maximum credit of
$5,656.50.
Provide additional marriage penalty relief through higher
threshold phase-out amounts for married couples filing
joint returns
The provision increases the threshold phase-out amounts for
married couples filing joint returns to $5,000\9\ above the
threshold phase-out amounts for singles, surviving spouses,
and heads of households for 2009 and 2010. For example, in
2009 the maximum credit of $3,043 for one qualifying child is
available for those with earnings between $8,950 and $16,420
($21,420 if married filing jointly). The credit begins to
phase down at a rate of 15.98 percent of earnings above
$16,420 ($21,420 if married filing jointly). The credit is
phased down to $0 at $35,463 of earnings ($40,463 if married
filing jointly).
---------------------------------------------------------------------------
\9\ The $5,000 is indexed for inflation in the case of
taxable years beginning in 2010.
---------------------------------------------------------------------------
Effective date
The provision is effective for taxable years beginning
after December 31, 2008.
Senate Amendment
The Senate amendment is the same as the House bill.
Conference Agreement
The conference agreement follows the House bill and the
Senate amendment.
3. Increase of refundable portion of the child credit (sec.
1102 of the House bill, sec. 1003 of the Senate
amendment, sec. 1003 of the conference agreement and sec.
24 of the Code)
Present Law
An individual may claim a tax credit for each qualifying
child under the age of 17. The amount of the credit per child
is $1,000 through 2010, and $500 thereafter. A child who is
not a citizen, national, or resident of the United States
cannot be a qualifying child.
The credit is phased out for individuals with income over
certain threshold amounts. Specifically, the otherwise
allowable child tax credit is reduced by $50 for each $1,000
(or fraction thereof) of modified adjusted gross income over
$75,000 for single individuals or heads of households,
$110,000 for married individuals filing joint returns, and
$55,000 for married individuals filing separate returns. For
purposes of this limitation, modified adjusted gross income
includes certain otherwise excludable income earned by U.S.
citizens or residents living abroad or in certain U.S.
territories.
The credit is allowable against the regular tax and the
alternative minimum tax. To the extent the child credit
exceeds the taxpayer's tax liability, the taxpayer is
eligible for a refundable credit (the additional child
[[Page H1443]]
tax credit) equal to 15 percent of earned income in excess of
a threshold dollar amount (the ``earned income'' formula).
The threshold dollar amount is $12,550 (for 2009), and is
indexed for inflation.
Families with three or more children may determine the
additional child tax credit using the ``alternative
formula,'' if this results in a larger credit than determined
under the earned income formula. Under the alternative
formula, the additional child tax credit equals the amount by
which the taxpayer's social security taxes exceed the
taxpayer's earned income tax credit (``EITC'').
Earned income is defined as the sum of wages, salaries,
tips, and other taxable employee compensation plus net self-
employment earnings. Unlike the EITC, which also includes the
preceding items in its definition of earned income, the
additional child tax credit is based only on earned income to
the extent it is included in computing taxable income. For
example, some ministers' parsonage allowances are considered
self-employment income and thus, are considered earned income
for purposes of computing the EITC, but the allowances are
excluded from gross income for individual income tax purposes
and thus, are not considered earned income for purposes of
the additional child tax credit.
Any credit or refund allowed or made to an individual under
this provision (including to any resident of a U.S.
possession) is not taken into account as income and shall not
be taken into account as resources for the month of receipt
and the following two months for purposes of determining
eligibility of such individual or any other individual for
benefits or assistance, or the amount or extent of benefits
or assistance, under any Federal program or under any State
or local program financed in whole or in part with Federal
funds.
House Bill
The provision modifies the earned income formula for the
determination of the refundable child credit to apply to 15
percent of earned income in excess of $0 for taxable years
beginning in 2009 and 2010.
Effective date.--The provision is effective for taxable
years beginning after December 31,
Senate Amendment
The Senate amendment is the same as the House bill except
that the refundable child credit is calculated to apply to 15
percent of earned income in excess of $8,100 for taxable
years beginning in 2009 and 2010.
Conference Agreement
The conference agreement follows the House bill and the
Senate amendment except that the refundable child credit is
calculated to apply to 15 percent of earned income in excess
of $3,000 for taxable years beginning in 2009 and 2010.
4. American Opportunity Tax credit (sec. 1201 of the House
bill, sec. 1004 of the Senate amendment, sec. 1004 of the
conference agreement, and sec. 25A of the Code)
Present Law
Individual taxpayers are allowed to claim a nonrefundable
credit, the Hope credit, against Federal income taxes of up
to $1,800 (for 2009) per eligible student per year for
qualified tuition and related expenses paid the first two
years of the student's post-secondary education in a degree
or certificate program\10\ The Hope credit rate is 100
percent on the first $1,200 of qualified tuition and related
expenses, and 50 percent on the next $1,200 of qualified
tuition and related expenses; these dollar amounts are
indexed for inflation, with the amount rounded down to the
next lowest multiple of $100. Thus, for example, a taxpayer
who incurs $1,200 of qualified tuition and related expenses
for an eligible student is eligible (subject to the adjusted
gross income phaseout described below) for a $1,200 Hope
credit. If a taxpayer incurs $2,400 of qualified tuition and
related expenses for an eligible student, then he or she is
eligible for a $1,800 Hope credit.
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\10\ Sec. 25A. The Hope credit generally may not be claimed
against a taxpayer's alternative minimum tax liability.
However, the credit may be claimed against a taxpayer's
alternative minimum tax liability for taxable years beginning
prior to January 1, 2009.
---------------------------------------------------------------------------
The Hope credit that a taxpayer may otherwise claim is
phased out ratably for taxpayers with modified adjusted gross
income between $50,000 and $60,000 ($100,000 and $120,000 for
married taxpayers filing a joint return) for 2009. The
adjusted gross income phaseout ranges are indexed for
inflation, with the amount rounded down to the next lowest
multiple of $1,000.
The qualified tuition and related expenses must be incurred
on behalf of the taxpayer, the taxpayer's spouse, or a
dependent of the taxpayer. The Hope credit is available with
respect to an individual student for two taxable years,
provided that the student has not completed the first two
years of post-secondary education before the beginning of the
second taxable year.
The Hope credit is available in the taxable year the
expenses are paid, subject to the requirement that the
education is furnished to the student during that year or
during an academic period beginning during the first three
months of the next taxable year. Qualified tuition and
related expenses paid with the proceeds of a loan generally
are eligible for the Hope credit. The repayment of a loan
itself is not a qualified tuition or related expense.
A taxpayer may claim the Hope credit with respect to an
eligible student who is not the taxpayer or the taxpayer's
spouse (e.g., in cases in which the student is the taxpayer's
child) only if the taxpayer claims the student as a dependent
for the taxable year for which the credit is claimed. If a
student is claimed as a dependent, the student is not
entitled to claim a Hope credit for that taxable year on the
student's own tax return. If a parent (or other taxpayer)
claims a student as a dependent, any qualified tuition and
related expenses paid by the student are treated as paid by
the parent (or other taxpayer) for purposes of determining
the amount of qualified tuition and related expenses paid by
such parent (or other taxpayer) under the provision. In
addition, for each taxable year, a taxpayer may elect either
the Hope credit, the Lifetime Learning credit, or an above-
the-line deduction for qualified tuition and related expenses
with respect to an eligible student.
The Hope credit is available for ``qualified tuition and
related expenses,'' which include tuition and fees (excluding
nonacademic fees) required to be paid to an eligible
educational institution as a condition of enrollment or
attendance of an eligible student at the institution. Charges
and fees associated with meals, lodging, insurance,
transportation, and similar personal, living, or family
expenses are not eligible for the credit. The expenses of
education involving sports, games, or hobbies are not
qualified tuition and related expenses unless this education
is part of the student's degree program.
Qualified tuition and related expenses generally include
only out-of-pocket expenses. Qualified tuition and related
expenses do not include expenses covered by employer-provided
educational assistance and scholarships that are not required
to be included in the gross income of either the student or
the taxpayer claiming the credit. Thus, total qualified
tuition and related expenses are reduced by any scholarship
or fellowship grants excludable from gross income under
section 117 and any other tax-free educational benefits
received by the student (or the taxpayer claiming the credit)
during the taxable year. The Hope credit is not allowed with
respect to any education expense for which a deduction is
claimed under section 162 or any other section of the Code.
An eligible student for purposes of the Hope credit is an
individual who is enrolled in a degree, certificate, or other
program (including a program of study abroad approved for
credit by the institution at which such student is enrolled)
leading to a recognized educational credential at an eligible
educational institution. The student must pursue a course of
study on at least a half-time basis. A student is considered
to pursue a course of study on at least a half-time basis if
the student carries at least one half the normal full-time
work load for the course of study the student is pursuing for
at least one academic period that begins during the taxable
year. To be eligible for the Hope credit, a student must not
have been convicted of a Federal or State felony consisting
of the possession or distribution of a controlled substance.
Eligible educational institutions generally are accredited
post-secondary educational institutions offering credit
toward a bachelor's degree, an associate's degree, or another
recognized post-secondary credential. Certain proprietary
institutions and post-secondary vocational institutions also
are eligible educational institutions. To qualify as an
eligible educational institution, an institution must be
eligible to participate in Department of Education student
aid programs.
Effective for taxable years beginning after December 31,
2010, the changes to the Hope credit made by the Economic
Growth and Tax Relief Reconciliation Act of 2001 (``EGTRRA'')
no longer apply. The principal EGTRRA change scheduled to
expire is the change that permitted a taxpayer to claim a
Hope credit in the same year that he or she claims an
exclusion from a Coverdell education savings account. Thus,
after 2010, a taxpayer cannot claim a Hope credit in the same
year he or she claims an exclusion from a Coverdell education
savings account.
House Bill
The provision modifies the Hope credit for taxable years
beginning in 2009 or 2010. The modified credit is referred to
as the American Opportunity Tax credit. The allowable
modified credit is up to $2,500 per eligible student per year
for qualified tuition and related expenses paid for each of
the first four years of the student's post-secondary
education in a degree or certificate program. The modified
credit rate is 100 percent on the first $2,000 of qualified
tuition and related expenses, and 25 percent on the next
$2,000 of qualified tuition and related expenses. For
purposes of the modified credit, the definition of qualified
tuition and related expenses is expanded to include course
materials.
Under the provision, the modified credit is available with
respect to an individual student for four years, provided
that the student has not completed the first four years of
post-secondary education before the beginning of the fourth
taxable year. Thus, the modified credit, in addition to other
modifications, extends the application of the Hope credit to
two more years of post-secondary education.
The modified credit that a taxpayer may otherwise claim is
phased out ratably for taxpayers with modified adjusted gross
income between $80,000 and $90,000 ($160,000 and $180,000 for
married taxpayers filing a joint return). The modified credit
may be claimed
[[Page H1444]]
against a taxpayer's alternative minimum tax liability.
Forty percent of a taxpayer's otherwise allowable modified
credit is refundable. However, no portion of the modified
credit is refundable if the taxpayer claiming the credit is a
child to whom section 1(g) applies for such taxable year
(generally, any child under age 18 or any child under age 24
who is a student providing less than one-half of his or her
own support, who has at least one living parent and does not
file a joint return).
In addition, the provision requires the Secretary of the
Treasury to conduct two studies and submit a report to
Congress on the results of those studies within one year
after the date of enactment. The first study shall examine
how to coordinate the Hope and Lifetime Learning credits with
the Pell grant program. The second study shall examine
requiring students to perform community service as a
condition of taking their tuition and related expenses into
account for purposes of the Hope and Lifetime Learning
credits.
Effective date.--The provision is effective with respect to
taxable years beginning after December 31, 2008.
Senate Amendment
The Senate amendment is the same as the House bill, except
that the Senate amendment provides that only 30 percent of a
taxpayer's otherwise allowable modified credit is refundable.
Conference Agreement
The conference agreement follows the House bill, with the
following modifications. Under the conference agreement, bona
fide residents of the U.S. possessions (American Samoa,
Commonwealth of the Northern Mariana Islands, Commonwealth of
Puerto Rico, Guam, Virgin Islands) are not permitted to claim
the refundable portion of the American opportunity credit in
the United States. Rather, a bona fide resident of a mirror
code possession (Commonwealth of the Northern Mariana
Islands, Guam, Virgin Islands) may claim the refundable
portion of the credit in the possession in which the
individual is a resident. Similarly, a bona fide resident of
a non-mirror code possession (Commonwealth of Puerto Rico,
American Samoa) may claim the refundable portion of the
credit in the possession in which the individual is a
resident, but only if that possession establishes a plan for
permitting the claim under its internal law.
The conference agreement provides that the U.S. Treasury
will make payments to the possessions in respect of credits
allowable to their residents under their internal laws.
Specifically, the U.S. Treasury will make payments for to
each mirror code possession in an amount equal to the
aggregate amount of the refundable portion of the credits
allowable by reason of the provision to that possession's
residents against its income tax. This amount will be
determined by the Treasury Secretary based on information
provided by the government of the respective possession. To
each possession that does not have a mirror code tax system,
the U.S. Treasury will make two payments (for 2009 and 2010,
respectively) in an amount estimated by the Secretary as
being equal to the aggregate amount of the refundable portion
of the credits that would have been allowed to residents of
that possession if a minor code tax system had been in effect
in that possession. Accordingly, the amount of each payment
to a non-mirror code possession will be an estimate of the
aggregate amount of the refundable portion of the credits
that would be allowed to the possession's residents if the
credit provided by the provision to U.S. residents were
provided by the possession to its residents. This payment
will not be made to any U.S. possession unless that
possession has a plan that has been approved by the Secretary
under which the possession will promptly distribute the
payment to its residents.
5. Temporarily allow computer technology and equipment as a
qualified higher education expense for qualified tuition
programs (sec. 1005 of the Senate amendment, sec. 1005 of
the conference agreement, and sec. 529 of the Code)
Present Law
Section 529 provides specified income tax and transfer tax
rules for the treatment of accounts and contracts established
under qualified tuition programs.\11\ VA qualified tuition
program is a program established and maintained by a State or
agency or instrumentality thereof, or by one or more eligible
educational institutions, which satisfies certain
requirements and under which a person may purchase tuition
credits or certificates on behalf of a designated beneficiary
that entitle the beneficiary to the waiver or payment of
qualified higher education expenses of the beneficiary (a
``prepaid tuition program''). In the case of a program
established and maintained by a State or agency or
instrumentality thereof, a qualified tuition program also
includes a program under which a person may make
contributions to an account that is established for the
purpose of satisfying the qualified higher education expenses
of the designated beneficiary of the account, provided it
satisfies certain specified requirements (a ``savings account
program''). Under both types of qualified tuition programs, a
contributor establishes an account for the benefit of a
particular designated beneficiary to provide for that
beneficiary's higher education expenses.
---------------------------------------------------------------------------
\11\ For purposes of this description, the term ``account''
is used interchangeably to refer to a prepaid tuition benefit
contract or a tuition savings account established pursuant to
a qualified tuition program.
---------------------------------------------------------------------------
For this purpose, qualified higher education expenses means
tuition, fees, books, supplies, and equipment required for
the enrollment or attendance of a designated beneficiary at
an eligible educational institution, and expenses for special
needs services in the case of a special needs beneficiary
that are incurred in connection with such enrollment or
attendance. Qualified higher education expenses generally
also include room and board for students who are enrolled at
least half-time.
Contributions to a qualified tuition program must be made
in cash. Section 529 does not impose a specific dollar limit
on the amount of contributions, account balances, or prepaid
tuition benefits relating to a qualified tuition account;
however, the program is required to have adequate safeguards
to prevent contributions in excess of amounts necessary to
provide for the beneficiary's qualified higher education
expenses. Contributions generally are treated as a completed
gift eligible for the gift tax annual exclusion.
Contributions are not tax deductible for Federal income tax
purposes, although they may be deductible for State income
tax purposes. Amounts in the account accumulate on a tax-free
basis (i.e., income on accounts in the plan is not subject to
current income tax).
Distributions from a qualified tuition program are
excludable from the distributee's gross income to the extent
that the total distribution does not exceed the qualified
higher education expenses incurred for the beneficiary. If a
distribution from a qualified tuition program exceeds the
qualified higher education expenses incurred for the
beneficiary, the portion of the excess that is treated as
earnings generally is subject to income tax and an additional
10-percent tax. Amounts in a qualified tuition program may be
rolled over to another qualified tuition program for the same
beneficiary or for a member of the family of that beneficiary
without income tax consequences.
In general, prepaid tuition contracts and tuition savings
accounts established under a qualified tuition program
involve prepayments or contributions made by one or more
individuals for the benefit of a designated beneficiary, with
decisions with respect to the contract or account to be made
by an individual who is not the designated beneficiary.
Qualified tuition accounts or contracts generally require the
designation of a person (generally referred to as an
``account owner'') whom the program administrator (oftentimes
a third party administrator retained by the State or by the
educational institution that established the program) may
look to for decisions, recordkeeping, and reporting with
respect to the account established for a designated
beneficiary. The person or persons who make the contributions
to the account need not be the same person who is regarded as
the account owner for purposes of administering the account.
Under many qualified tuition programs, the account owner
generally has control over the account or contract, including
the ability to change designated beneficiaries and to
withdraw funds at any time and for any purpose. Thus, in
practice, qualified tuition accounts or contracts generally
involve a contributor, a designated beneficiary, an account
owner (who oftentimes is not the contributor or the
designated beneficiary), and an administrator of the account
or contract.\12\
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\12\ Section 529 refers to contributors and designated
beneficiaries, but does not define or otherwise refer to the
term account owner, which is a commonly used term among
qualified tuition programs.
---------------------------------------------------------------------------
House Bill
No provision.
Senate Amendment
The provision expands the definition of qualified higher
education expenses for expenses paid or incurred in 2009 and
2010 to include expenses for certain computer technology and
equipment to be used by the designated beneficiary while
enrolled at an eligible educational institution.
Effective date.--The provision is effective for expenses
paid or incurred after December 31, 2008.
Conference Agreement
The conference agreement follows the Senate amendment.
6. Modifications to homebuyer credit (sec. 1301 of the House
bill, sec. 1006 of the Senate amendment, sec. 1006 of the
conference agreement, and sec. 36 of the Code)
Present Law
A taxpayer who is a first-time homebuyer is allowed a
refundable tax credit equal to the lesser of $7,500 ($3,750
for a married individual filing separately) or 10 percent of
the purchase price of a principal residence. The credit is
allowed for the tax year in which the taxpayer purchases the
home unless the taxpayer makes an election as described
below. The credit is allowed for qualifying home purchases on
or after April 9, 2008 and before July 1, 2009 (without
regard to whether there was a binding contract to purchase
prior to April 9, 2008).
The credit phases out for individual taxpayers with
modified adjusted gross income between $75,000 and $95,000
($150,000 and $170,000 for joint filers) for the year of
purchase.
A taxpayer is considered a first-time homebuyer if such
individual had no ownership interest in a principal residence
in the United
[[Page H1445]]
States during the three-year period prior to the purchase of
the home to which the credit applies.
No credit is allowed if the D.C. homebuyer credit is
allowable for the taxable year the residence is purchased or
a prior taxable year. A taxpayer is not permitted to claim
the credit if the taxpayer's financing is from tax-exempt
mortgage revenue bonds, if the taxpayer is a nonresident
alien, or if the taxpayer disposes of the residence (or it
ceases to be a principal residence) before the close of a
taxable year for which a credit otherwise would be allowable.
The credit is recaptured ratably over fifteen years with no
interest charge beginning in the second taxable year after
the taxable year in which the home is purchased. For example,
if the taxpayer purchases a home in 2008, the credit is
allowed on the 2008 tax return, and repayments commence with
the 2010 tax return. If the taxpayer sells the home (or the
home ceases to be used as the principal residence of the
taxpayer or the taxpayer's spouse) prior to complete
repayment of the credit, any remaining credit repayment
amount is due on the tax return for the year in which the
home is sold (or ceases to be used as the principal
residence). However, the credit repayment amount may not
exceed the amount of gain from the sale of the residence to
an unrelated person. For this purpose, gain is determined by
reducing the basis of the residence by the amount of the
credit to the extent not previously recaptured. No amount is
recaptured after the death of a taxpayer. In the case of an
involuntary conversion of the home, recapture is not
accelerated if a new principal residence is acquired within a
two year period. In the case of a transfer of the residence
to a spouse or to a former spouse incident to divorce, the
transferee spouse (and not the transferor spouse) will be
responsible for any future recapture.
An election is provided to treat a home purchased in the
eligible period in 2009 as if purchased on December 31, 2008
for purposes of claiming the credit on the 2008 tax return
and for establishing the beginning of the recapture period.
Taxpayers may amend their returns for this purpose.
House Bill
The provision waives the recapture of the credit for
qualifying home purchases after December 31, 2008 and before
July 1, 2009. This waiver of recapture applies without regard
to whether the taxpayer elects to treat the purchase in 2009
as occurring on December 31, 2008. If the taxpayer disposes
of the home or the home otherwise ceases to be the principal
residence of the taxpayer within 36 months from the date of
purchase, the present law rules for recapture of the credit
will still apply.
Effective date.--The provision applies to residences
purchased after December 31, 2008.
Senate Amendment
The Senate amendment repeals the existing section 36 for
purchases on or after the date of enactment of the American
Recovery and Reinvestment Act of 2009.
A taxpayer is allowed a new nonrefundable tax credit equal
to the lesser of $15,000 ($7,500 for a married individual
filing separately) or 10 percent of the purchase price of a
principal residence. The credit is allowed for the tax year
in which the taxpayer purchases the home unless the taxpayer
makes an election as described below. The credit is allowed
for qualifying home purchases after the date of enactment of
the American Recovery and Reinvestment Act and on or before
the date that is one year after such date of enactment.
The credit is limited to the excess of regular tax
liability plus alternative minimum tax liability over the sum
of other nonrefundable personal credits.
No credit is allowed for any purchase for which the section
36 first-time homebuyer credit or the D.C. homebuyer credit
is allowable. If a credit is allowed under this provision in
the case of any individual (and such individual's spouse, if
married) with respect to the purchase of any principal
residence, no credit is allowed with respect to the purchase
of any other principal residence by such individual or a
spouse of such individual.
If the taxpayer disposes of the residence (or it ceases to
be a principal residence) at any time within 24 months after
the date on which the taxpayer purchased the residence, then
the credit shall be subject to recapture for the taxable year
in which such disposition occurred (or in which the taxpayer
failed to occupy the residence as a principal residence). No
amount is recaptured after the death of a taxpayer or in the
case of a member of the Armed Forces of the United States on
active duty who fails to meet the residency requirement
pursuant to a military order and incident to a permanent
change of station. In the case of an involuntary conversion
of the home, recapture is not accelerated if a new principal
residence is acquired within a two year period. In the case
of a transfer of the residence to a spouse or to a former
spouse incident to divorce, the transferee spouse (and not
the transferor spouse) will be responsible for any future
recapture.
A further election is provided to treat a home purchased in
the eligible period as if purchased on December 31, 2008 for
purposes of claiming the credit on the 2008 tax return.
Taxpayers may amend their returns for this purpose.
Effective date.--The provision applies to purchases after
the date of enactment.
Conference Agreement
The conference agreement extends the existing homebuyer
credit for qualifying home purchases before December 1, 2009.
In addition, it increases the maximum credit amount to $8,000
($4,000 for a married individual filing separately) and
waives the recapture of the credit for qualifying home
purchases after December 31, 2008 and before December 1,
2009. This waiver of recapture applies without regard to
whether the taxpayer elects to treat the purchase in 2009 as
occurring on December 31, 2008. If the taxpayer disposes of
the home or the home otherwise ceases to be the principal
residence of the taxpayer within 36 months from the date of
purchase, the present law rules for recapture of the credit
will apply.
The conference agreement modifies the coordination with the
first-time homebuyer credit for residents of the District of
Columbia under section 1400C. No credit under section 1400C
shall be allowed to any taxpayer with respect to the purchase
of a residence during 2009 if a credit under section 36 is
allowable to such taxpayer (or the taxpayer's spouse) with
respect to such purchase. Taxpayers thus qualify for the more
generous national first-time homebuyer credit rather than the
D.C. homebuyer credit for qualifying purchases in 2009. No
credit under section 36 is allowed for a taxpayer who claimed
the D.C. homebuyer credit in any prior taxable year.
The conference agreement removes the prohibition on
claiming the credit if the residence is financed by the
proceeds of a mortgage revenue bond, a qualified mortgage
issue the interest on which is exempt from tax under section
103.
Effective date.--The provision applies to residences
purchased after December 31, 2008.
7. Election to substitute grants to states for low-income
housing projects in lieu of low-income housing credit
allocation for 2009 (secs. 1302 and 1711 of the House
bill, secs. 1404 and 1602 of the conference agreement,
and sec. 42 of the Code)
Present Law
In general
The low-income housing credit may be claimed over a 10-year
period by owners of certain residential rental property for
the cost of rental housing occupied by tenants having incomes
below specified levels.\13\ The amount of the credit for any
taxable year in the credit period is the applicable
percentage of the qualified basis of each qualified low-
income building. The qualified basis of any qualified low-
income building for any taxable year equals the applicable
fraction of the eligible basis of the building.
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\13\ Sec. 42.
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Volume limits
A low-income housing credit is allowable only if the owner
of a qualified building receives a housing credit allocation
from the State or local housing credit agency. Generally, the
aggregate credit authority provided annually to each State
for calendar year 2009 is $2.30 per resident, with a minimum
annual cap of $2,665,000 for certain small population States.
\14\ These amounts are indexed for inflation. Projects that
also receive financing with proceeds of tax-exempt bonds
issued subject to the private activity bond volume limit do
not require an allocation of the low-income housing credit.
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\14\ Rev. Proc. 2008-66.
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Basic rule for Federal grants
The basis of a qualified building must be reduced by the
amount of any federal grant with respect to such building.
House Bill
Low-income housing grant election amount
The Secretary of the Treasury shall make a grant to the
State housing credit agency of each State in an amount equal
to the low-income housing grant election amount.
The low-income housing grant election amount for a State is
an amount elected by the State subject to certain limits. The
maximum low-income housing grant election amount for a State
may not exceed 85 percent of the product of ten and the sum
of the State's: (1) unused housing credit ceiling for 2008;
(2) any returns to the State during 2009 of credit
allocations previously made by the State; (3) 40 percent of
the State's 2009 credit allocation; and (4) 40 percent of the
State's share of the national pool allocated in 2009, if any.
Grants under this provision are not taxable income to
recipients.
Subawards to low-income housing credit buildings
A State receiving a grant under this provision is to use
these monies to make subawards to finance the construction,
or acquisition and rehabilitation of qualified low-income
buildings as defined under the low-income housing credit. A
subaward may be made to finance a qualified low-income
building regardless of whether the building has an allocation
of low-income housing credit. However, in the case of
qualified low-income buildings without allocations of the
low-income housing credit, the State housing credit agency
must make a determination that the subaward with respect to
such building will increase the total funds available to the
State to build and rehabilitate affordable housing. In
conjunction with this determination the State housing credit
agency must establish a process in which applicants for the
subawards must demonstrate
[[Page H1446]]
good faith efforts to obtain investment commitments before
the agency makes such subawards.
Any building receiving grant money from a subaward is
required to satisfy the low-income housing credit rules. The
State housing credit agency shall perform asset management
functions to ensure compliance with the low-income housing
credit rules and the long-term viability of buildings
financed with these subawards. \15\ Failure to satisfy the
low-income housing credit rules will result in recapture
enforced by means of liens or other methods that the
Secretary of the Treasury (or delegate) deems appropriate.
Any such recapture will be payable to the Secretary of the
Treasury for deposit in the general fund of the Treasury.
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\15\ The State housing credit agency may collect reasonable
fees from subaward recipients to cover the expenses of the
agency's asset management duties. Alternatively, the State
housing credit agency may retain a thirdparty to perform
these asset management duties.
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Any grant funds not used to make subawards before January
1, 2011 and any grant monies from subawards returned on or
after January 1, 2011 must be returned to the Secretary of
the Treasury.
Basic rule for Federal grants
The grants received under this provision do not reduce tax
basis of a qualified low-income building.
Reduction in low-income housing credit volume limit for 2009
The otherwise applicable low-income housing credit volume
limit for any State for 2009 is reduced by the amount taken
into account in determining the low-income housing grant
election amount.
Appropriations
The provision appropriates to the Secretary of the Treasury
such sums as may be necessary to carry out this provision.
Effective date
The provision is effective on the date of enactment.
Senate Amendment
No provision.
Conference Agreement
The conference agreement follows the House bill.
8. Election to accelerate the low-income housing credit
allocation (sec. 1903 of the Senate amendment)
Present Law
In general
The low-income housing credit may be claimed over a 10-year
period by owners of certain residential rental property for
the cost of rental housing occupied by tenants having incomes
below specified levels. \16\ The amount of the credit for any
taxable year in the credit period is the applicable
percentage of the qualified basis of each qualified low-
income building. The qualified basis of any qualified low-
income building for any taxable year equals the applicable
fraction of the eligible basis of the building.
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\16\ Sec. 42.
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Volume limits
A low-income housing credit is allowable only if the owner
of a qualified building receives a housing credit allocation
from the State or local housing credit agency. Generally, the
aggregate credit authority provided annually to each State
for calendar year 2009 is $2.30 per resident, with a minimum
annual cap of $2,665,000 for certain small population States.
\17\ These amounts are indexed for inflation. Projects that
also receive financing with proceeds of tax-exempt bonds
issued subject to the private activity bond volume limit do
not require an allocation of the low-income housing credit.
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\17\ Rev. Proc. 2008-66.
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House Bill
No provision.
Senate Amendment
The provision allows a taxpayer election to double the
amount of the otherwise allowable low-income housing tax
credit with respect to a project for each of the taxpayer's
first three taxable years beginning after December 31, 2008.
The otherwise allowable low-income housing tax credit over
the remaining credit period for the project with respect to a
taxpayer making the election will be reduced on a pro rata
basis by an amount equal to the acceleration in the first
three years.
The election is only available for non federally subsidized
low-income housing projects placed in service after December
31, 2008 which are pursuant to a low-income housing credit
allocation from a State housing credit ceiling before 2011
(e.g. an allocation of 2011 credit ceiling makes the project
ineligible for the election). Further, the election is
limited to low-income housing tax credit initial investments
made pursuant to a binding agreement by the taxpayer after
December 31, 2008 and before January 1, 2011. For example, a
taxpayer could not make this election with respect to initial
investments made pursuant to a binding agreement in existence
on January 1, 2008 even though the building is not placed-in-
service until after December 31, 2008.
The election shall be made in a time and manner prescribed
by the Secretary of the Treasury (or his delegate). The
election is irrevocable. In the case of a partnership the
election can only be made at the partnership level, not by
individual partners.
Effective date.--The provision is effective on the date of
enactment.
Conference Agreement
The conference agreement does not follow the Senate
amendment.
9. Exclusion from gross income for unemployment compensation
benefits (sec. 1007 of the Senate amendment, sec. 1007 of
the conference agreement, and sec. 85 of the Code)
Present Law
An individual must include in gross income any unemployment
compensation benefits received under the laws of the United
States or any State.
House Bill
No provision.
Senate Amendment
The Senate amendment provides that up to $2,400 of
unemployment compensation benefits received in 2009 are
excluded from gross income by the recipient.
Effective date.--The provision is effective for taxable
years beginning after December 31, 2008.
Conference Agreement
The conference agreement follows the Senate amendment.
10. Deduction for interest on indebtedness for the purchase
of qualified motor vehicles (sec. 1008 of the Senate
amendment)
Present Law
In the case of a taxpayer other than a corporation, no
deduction is allowed for personal interest paid or accrued
during the taxable year. Personal interest is all interest
other than 1) interest paid or accrued on indebtedness
properly allocable to a trade or business; 2) investment
interest; 3) interest which is taken into account in
computing income or loss from a passive activity of the
taxpayer; 4) qualified home mortgage interest; 5) certain
estate tax related interest; and 6) certain interest on
educational loans.
House Bill
No provision.
Senate Amendment
The Senate amendment provides an above-the-line deduction
for qualified motor vehicle interest. Qualified motor vehicle
interest means any interest paid or accrued during the
taxable year on any indebtedness incurred after November 12,
2008 and before January 1, 2010 to acquire a qualified motor
vehicle and secured by such vehicle. It also includes
interest on any indebtedness secured by such qualified motor
vehicle resulting from the refinancing of otherwise qualified
motor vehicle interest. The amount of qualified indebtedness
is limited to $49,500 ($24,750 in the case of a married
individual filing separately). The deduction is phased out
for taxpayers with modified adjusted gross income between
$125,000 and $135,000 ($250,000 and $260,000 in the case of a
joint return).
If the indebtedness includes the amounts of any State or
local sales or excise taxes paid or accrued by the taxpayer
in connection with the acquisition of a qualified motor
vehicle for which a deduction is allowed under section
164(a)(6) (relating to the deduction of State and local sales
or excise taxes on qualified motor vehicles), the aggregate
amount of such indebtedness taken into account shall be
reduced, but not below zero, by the amount of any such taxes
for which such deduction is allowed.
A qualified motor vehicle means a passenger automobile or
light truck acquired for use by the taxpayer and not for
resale after November 12, 2008 and before January 1, 2010,
the original use of which commences with the taxpayer and
which has a gross vehicle weight rating of not more than
8,500 pounds.
Any person who is engaged in a trade or business and
receives from any individual $600 or more of qualified motor
vehicle interest for any calendar year is required to report
certain information as the Secretary may prescribe and
furnish information to such individual on or before January
31 of the year following the calendar year for which the
interest is received.
Effective date.--The provision is effective for taxable
years beginning after December 31, 2008.
Conference Agreement
The conference agreement does not follow the Senate
amendment.
11. Deduction for State sales tax and excise tax on the
purchase of qualified motor vehicles (sec. 1009 of the
Senate amendment, sec. 1008 of the conference agreement,
and secs. 63 and 164 of the Code)
Present Law
In general, a deduction from gross income is allowed for
certain taxes for the taxable year within which the taxes are
paid or accrued. These include State and local, and foreign,
real property taxes; State and local personal property taxes;
State, local, and foreign income, war profits, and excess
profit taxes; generation skipping transfer taxes;
environmental taxes imposed by section 59A; and taxes paid or
accrued within the taxable year in carrying on a trade or
business or an activity described in section 212 (relating to
the expenses for production of income). At the election of
the taxpayer for the taxable year, a taxpayer may deduct
State and local sales taxes in lieu of State and local income
taxes. No deduction is allowed for any general sales tax
imposed with respect to an item at a rate other than the
general rate of tax, except in the case of a lower rate of
tax
[[Page H1447]]
applicable to items of food, clothing, medical supplies, and
motor vehicles. In the case of motor vehicles, if the rate of
tax exceeds the general rate, such excess shall be
disregarded and the general rate shall be treated as the rate
of tax.
House Bill
No provision.
Senate Amendment
The Senate amendment provides an above-the-line deduction
for qualified motor vehicle taxes. Qualified motor vehicle
taxes include any State or local sales or excise tax imposed
on the purchase of a qualified motor vehicle. A qualified
motor vehicle means a passenger automobile or light truck
acquired for use by the taxpayer and not for resale after
November 12, 2008 and before January 1, 2010, the original
use of which commences with the taxpayer and which has a
gross vehicle weight rating of not more than 8,500 pounds.
The deduction is limited to sales tax of up to $49,500.
The deduction is phased out for taxpayers with modified
adjusted gross income between $125,000 and $135,000 ($250,000
and $260,000 in the case of a joint return).
Notwithstanding other provisions of present law, qualified
motor vehicle taxes are not treated as part of the cost of
acquired property or, in the case of a disposition, as a
reduction in the amount realized on the disposition.
A taxpayer who makes an election to deduct State and local
sales taxes for the taxable year shall not be allowed the
above-the-line deduction for qualified motor vehicle taxes.
If the indebtedness described in section 163(h)(5)(A)
includes the amounts of any State or local sales or excise
taxes paid or accrued by the taxpayer in connection with the
acquisition of a qualified motor vehicle, the aggregate
amount of such indebtedness taken into account shall be
reduced, but not below zero, by the amount of any such taxes
for which a deduction is allowed.
Effective date.--The provision is effective for taxable
years beginning after December 31, 2008.
Conference Agreement
The conference agreement does not include the House bill or
the Senate amendment. The conference agreement provides a
deduction for qualified motor vehicle taxes. It expands the
definition of taxes allowed as a deduction to include
qualified motor vehicle taxes paid or accrued within the
taxable year. A taxpayer who itemizes and makes an election
to deduct State and local sales taxes for qualified motor
vehicles for the taxable year shall not be allowed the
increased standard deduction for qualified motor vehicle
taxes.
Qualified motor vehicle taxes include any State or local
sales or excise tax imposed on the purchase of a qualified
motor vehicle. A qualified motor vehicle means a passenger
automobile, light truck, or motorcycle which has a gross
vehicle weight rating of not more than 8,500 pounds, or a
motor home acquired for use by the taxpayer after the date of
enactment and before January 1, 2010, the original use of
which commences with the taxpayer.
The deduction is limited to the tax on up to $49,500 of the
purchase price of a qualified motor vehicle. The deduction is
phased out for taxpayers with modified adjusted gross income
between $125,000 and $135,000 ($250,000 and $260,000 in the
case of a joint return).
Effective date.--The provision is effective for purchases
on or after the date of enactment and before January 1, 2010.
12. Extend alternative minimum tax relief for individuals
(secs. 1011 and 1012 of the Senate amendment, secs. 1011
and 1012 of the conference agreement, and secs. 26 and 55
of the Code)
Present Law
Present law imposes an alternative minimum tax (``AMT'') on
individuals. The AMT is the amount by which the tentative
minimum tax exceeds the regular income tax. An individual's
tentative minimum tax is the sum of (1) 26 percent of so much
of the taxable excess as does not exceed $175,000 ($87,500 in
the case of a married individual filing a separate return)
and (2) 28 percent of the remaining taxable excess. The
taxable excess is so much of the alternative minimum taxable
income (``AMTI'') as exceeds the exemption amount. The
maximum tax rates on net capital gain and dividends used in
computing the regular tax are used in computing the tentative
minimum tax. AMTI is the individual's taxable income adjusted
to take account of specified preferences and adjustments.
The exemption amounts are: (1) $69,950 for taxable years
beginning in 2008 and $45,000 in taxable years beginning
after 2008 in the case of married individuals filing a joint
return and surviving spouses; (2) $46,200 for taxable years
beginning in 2008 and $33,750 in taxable years beginning
after 2008 in the case of other unmarried individuals; (3)
$34,975 for taxable years beginning in 2008 and $22,500 in
taxable years beginning after 2008 in the case of married
individuals filing separate returns; and (4) $22,500 in the
case of an estate or trust. The exemption amount is phased
out by an amount equal to 25 percent of the amount by which
the individual's AMTI exceeds (1) $150,000 in the case of
married individuals filing a joint return and surviving
spouses, (2) $112,500 in the case of other unmarried
individuals, and (3) $75,000 in the case of married
individuals filing separate returns or an estate or a trust.
These amounts are not indexed for inflation.
Present law provides for certain nonrefundable personal tax
credits (i.e., the dependent care credit, the credit for the
elderly and disabled, the adoption credit, the child credit,
the credit for interest on certain home mortgages, the Hope
Scholarship and Lifetime Learning credits, the credit for
savers, the credit for certain nonbusiness energy property,
the credit for residential energy efficient property, the
credit for plug-in electric drive motor vehicles; and the
D.C. first-time homebuyer credit).
For taxable years beginning before 2009, the nonrefundable
personal credits are allowed to the extent of the full amount
of the individual's regular tax and alternative minimum tax.
For taxable years beginning after 2008, the nonrefundable
personal credits (other than the adoption credit, the child
credit, the credit for savers, the credit for residential
energy efficient property, and the credit for plug-in
electric drive motor vehicles) are allowed only to the extent
that the individual's regular income tax liability exceeds
the individual's tentative minimum tax, determined without
regard to the minimum tax foreign tax credit. The adoption
credit, the child credit, the credit for savers, the credit
for residential energy efficient property, and the credit for
plug-in electric drive motor vehicles are allowed to the full
extent of the individual's regular tax and alternative
minimum tax.\18\
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\18\ The rule applicable to the adoption credit and child
credit is subject to the EGTRRA sunset.
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House Bill
No provision.
Senate Amendment
The Senate amendment provides that the individual AMT
exemption amount for taxable years beginning in 2009 is
$70,950, in the case of married individuals filing a joint
return and surviving spouses; (2) $46,700 in the case of
other unmarried individuals; and (3) $35,475 in the case of
married individuals filing separate returns.
For taxable years beginning in 2009, the provision allows
an individual to offset the entire regular tax liability and
alternative minimum tax liability by the nonrefundable
personal credits.
Effective date.--The provision is effective for taxable
years beginning in 2009.
Conference Agreement
The conference agreement follows the Senate amendment.
B. Tax Incentives for Business
1. Special allowance for certain property acquired during
2009 and extension of election to accelerate AMT and
research credits in lieu of bonus depreciation (sec. 1401
of the House bill, sec. 1201 of the Senate amendment,
sec. 1201 of the conference agreement, and sec. 168(k) of
the Code)
Present Law
An additional first-year depreciation deduction is allowed
equal to 50 percent of the adjusted basis of qualified
property placed in service during 2008 (and 2009 for certain
longer-lived and transportation property).\19\ The additional
first-year depreciation deduction is allowed for both regular
tax and alteative minimum tax purposes for the taxable year
in which the property is placed in service.\20\ The basis of
the property and the depreciation allowances in the year of
purchase and later years are appropriately adjusted to
reflect the additional first-year depreciation deduction. In
addition, there are no adjustments to the allowable amount of
depreciation for purposes of computing a taxpayer's
alternative minimum taxable income with respect to property
to which the provision applies. The amount of the additional
first-year depreciation deduction is not affected by a short
taxable year. The taxpayer may elect out of additional first-
year depreciation for any class of property for any taxable
year.
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\19\ Sec. 168(k). The additional first-year depreciation
deduction is subject to the general rules regarding whether
an item is deductible under section 162 or instead is subject
to capitalization under section 263 or section 263A.
\20\ However, the additional first-year depreciation
deduction is not allowed for purposes of computing earnings
and profits.
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The interaction of the additional first-year depreciation
allowance with the otherwise applicable depreciation
allowance may be illustrated as follows. Assume that in 2008,
a taxpayer purchases new depreciable property and places it
in service.\21\ The property's cost is $1,000, and it is
five-year property subject to the half-year convention. The
amount of additional first-year depreciation allowed is $500.
The remaining $500 of the cost of the property is deductible
under the rules applicable to 5-year property. Thus, 20
percent, or $100, is also allowed as a depreciation deduction
in 2008. The total depreciation deduction with respect to the
property for 2008 is $600. The remaining $400 cost of the
property is recovered under otherwise applicable rules for
computing depreciation.
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\21\ Assume that the cost of the property is not eligible for
expensing under section 179.
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In order for property to qualify for the additional first-
year depreciation deduction it must meet all of the following
requirements. First, the property must be (1) property to
which MACRS applies with an applicable recovery period of 20
years or less, (2) water
[[Page H1448]]
utility property (as defined in section 168(e)(5)), (3)
computer software other than computer software covered by
section 197, or (4) qualified leasehold improvement property
(as defined in section 168(k)(3)).\22\
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\22\ A special rule precludes the additional first-year
depreciation deduction for any property that is required to
be depreciated under the alternative depreciation system of
MACRS.
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Second, the original use \23\ of the property must commence
with the taxpayer after December 31, 2007.\24\ Third, the
taxpayer must purchase the property within the applicable
time period. Finally, the property must be placed in service
after December 31, 2007, and before January 1, 2009. An
extension of the placed in service date of one year (i.e., to
January 1, 2010) is provided for certain property with a
recovery period of ten years or longer and certain
transportation property.\25\ Transportation property is
defined as tangible personal property used in the trade or
business of transporting persons or property.
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\23\ The term ``original use'' means the first use to which
the property is put, whether or not such use corresponds to
the use of such property by the taxpayer.
If in the normal course of its business a taxpayer sells
fractional interests in property to unrelated third parties,
then the original use of such property begins with the first
user of each fractional interest (i,e., each fractional owner
is considered the original user of its proportionate share of
the property).
\24\ A special rule applies in the case of certain leased
property. In the case of any property that is originally
placed in service by a person and that is sold to the
taxpayer and leased back to such person by the taxpayer
within three months after the date that the property was
placed in service, the property would be treated as
originally placed in service by the taxpayer not earlier than
the date that the property is used under the leaseback.
If property is originally placed in service by a lessor
(including by operation of section 168(k)(2)(D)(i)), such
property is sold within three months after the date that the
property was placed in service, and the user of such property
does not change, then the property is treated as originally
placed in service by the taxpayer not earlier than the date
of such sale.
\25\ In order for property to qualify for the extended placed
in service date, the property is required to have an
estimated production period exceeding one year and a cost
exceeding $1 million.
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The applicable time period for acquired property is (1)
after December 31, 2007, and before January 1, 2009, but only
if no binding written contract for the acquisition is in
effect before January 1, 2008, or (2) pursuant to a binding
written contract which was entered into after December 31,
2007, and before January 1, 2009.\26\ With respect to
property that is manufactured, constructed, or produced by
the taxpayer for use by the taxpayer, the taxpayer must begin
the manufacture, construction, or production of the property
after December 31, 2007, and before January 1, 2009. Property
that is manufactured, constructed, or produced for the
taxpayer by another person under a contract that is entered
into prior to the manufacture, construction, or production of
the property is considered to be manufactured, constructed,
or produced by the taxpayer. For property eligible for the
extended placed in service date, a special rule limits the
amount of costs eligible for the additional first-year
depreciation. With respect to such property, only the portion
of the basis that is properly attributable to the costs
incurred before January 1, 2009 (``progress expenditures'')
is eligible for the additional first-year depreciation.\27\
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\26\ Property does not fail to qualify for the additional
first-year depreciation merely because a binding written
contract to acquire a component of the property is in effect
prior to January 1, 2008.
\27\ For purposes of determining the amount of eligible
progress expenditures, it is intended that rules similar to
sec. 46(d)(3) as in effect prior to the Tax Reform Act of
1986 shall apply.
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Property does not qualify for the additional first-year
depreciation deduction when the user of such property (or a
related party) would not have been eligible for the
additional first-year depreciation deduction if the user (or
a related party) were treated as the owner. For example, if a
taxpayer sells to a related party property that was under
construction prior to January 1, 2008, the property does not
qualify for the additional first-year depreciation deduction.
Similarly, if a taxpayer sells to a related party property
that was subject to a binding written contract prior to
January 1, 2008, the property does not qualify for the
additional first-year depreciation deduction. As a further
example, if a taxpayer (the lessee) sells property in a sale-
leaseback arrangement, and the property otherwise would not
have qualified for the additional first-year depreciation
deduction if it were owned by the taxpayer-lessee, then the
lessor is not entitled to the additional first-year
depreciation deduction.
The limitation on the amount of depreciation deductions
allowed with respect to certain passenger automobiles (sec.
280F) is increased in the first year by $8,000 for
automobiles that qualify (and do not elect out of the
increased first year deduction). The $8,000 increase is not
indexed for inflation.
Corporations otherwise eligible for additional first year
depreciation under section 168(k) may elect to claim
additional research or minimum tax credits in lieu of
claiming depreciation under section 168(k) for ``eligible
qualified property'' placed in service after March 31, 2008
and before December 31, 2008.\28\ A corporation making the
election forgoes the depreciation deductions allowable under
section 168(k) and instead increases the limitation under
section 38(c) on the use of research credits or section 53(c)
on the use of minimum tax credits.\29\ The increases in the
allowable credits are treated as refundable for purposes of
this provision. The depreciation for qualified property is
calculated for both regular tax and AMT purposes using the
straight-line method in place of the method that would
otherwise be used absent the election under this provision.
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\28\ Sec. 168(k)(4). In the case of an electing corporation
that is a partner in a partnership, the corporate partner's
distributive share of partnership items is determined as if
section 168(k) does not apply to any eligible qualified
property and the straight line method is used to calculate
depreciation of such property.
\29\ Special rules apply to an applicable partnership.
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The research credit or minimum tax credit limitation is
increased by the bonus depreciation amount, which is equal to
20 percent of bonus depreciation \30\ for certain eligible
qualified property that could be claimed absent an election
under this provision. Generally, eligible qualified property
included in the calculation is bonus depreciation property
that meets the following requirements: (1) the original use
of the property must commence with the taxpayer after March
31, 2008; (2) the taxpayer must purchase the property either
(a) after March 31, 2008, and before January 1, 2009, but
only if no binding written contract for the acquisition is in
effect before April 1, 2008,\31\ or (b) pursuant to binding
written contract which was entered into after March 31, 2008,
and before January 1, 2009; \32\ and (3) the property must be
placed in service after March 31, 2008, and before January 1,
2009 (January 1, 2010 for certain longer-lived and
transportation property).
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\30\ For this purpose, bonus depreciation is the difference
between (i) the aggregate amount of depreciation for all
eligible qualified property determined if section 168(k)(1)
applied using the most accelerated depreciation method
(determined without regard to this provision), and shortest
life allowable for each property, and (ii) the amount of
depreciation that would be determined if section 168(k)(1)
did pot ply using the same method and life for each property.
\31\ In the case of passenger aircraft, the written binding
contract limitation does not apply.
\32\ Special rules apply to property manufactured,
constructed, or produced by the taxpayer for use by the
taxpayer.
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The bonus depreciation amount is limited to the lesser of:
(1) $30 million, or (2) six percent of the sum of research
credit carryforwards from taxable years beginning before
January 1, 2006 and minimum tax credits allocable to the
adjusted minimum tax imposed for taxable years beginning
before January 1, 2006. All corporations treated as a single
employer under section 52(a) are treated as one taxpayer for
purposes of the limitation, as well as for electing the
application of this provision.
House Bill
The provision extends the additional first-year
depreciation deduction for one year generally through 2009
(through 2010 for certain longer-lived and transportation
property).\33\
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\33\ The provision does not modify the property eligible for
the election to accelerate AMT and research credits in lieu
of bonus depreciation under section 168(k)(4). However, the
provision includes a technical amendment to section
168(k)(4)(D) providing that no written binding contract for
the acquisition of eligible qualified property may be in
effect before April 1, 2008 (effective for taxable years
ending after March 31, 2008).
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Effective date.--The provision is effective for property
placed in service after December 31, 2008.
Senate Amendment
The provision extends the additional first-year
depreciation deduction for one year, generally through 2009
(through 2010 for certain longer-lived and transportation
property).
The provision generally permits corporations to increase
the research credit or minimum tax credit limitation by the
bonus depreciation amount with respect to certain property
placed in service in 2009 (2010 in the case of certain
longer-lived and transportation property). The provision
applies with respect to extension property, which is defined
as property that is eligible qualified property solely
because it meets the requirements under the extension of the
special allowance for certain property acquired during 2009.
Under the provision, a taxpayer that has made an election
to increase the research credit or minimum tax credit
limitation for eligible qualified property for its first
taxable year ending after March 31, 2008, may choose not to
make this election for extension property. Further, the
provision allows a taxpayer that has not made an election for
eligible qualified property for its first taxable year ending
after March 31, 2008, to make the election for extension
property for its first taxable year ending after December 31,
2008, and for each subsequent year. In the case of a taxpayer
electing to increase the research or minimum tax credit for
both eligible qualified property and extension property, a
separate bonus depreciation amount, maximum amount, and
maximum increase amount is computed and applied to each group
of property.\34\
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\34\ In computing the maximum amount, the maximum increase
amount for extension property is reduced by bonus
depreciation amounts for preceding taxable years only with
respect to extension property.
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Effective date.--The extension of the additional first-year
depreciation deduction is generally effective for property
placed in service after December 31, 2008.
The extension of the election to accelerate AMT and
research credits in lieu of bonus depreciation is effective
for taxable years ending after December 31, 2008.
[[Page H1449]]
Conference Agreement
The conference agreement follows the Senate amendment.
2. Temporary increase in limitations on expensing of certain
depreciable business assets (sec. 1402 of the House bill,
sec. 1202 of the Senate amendment, sec. 1202 of the
conference agreement, and sec. 179 of the Code)
Present Law
In lieu of depreciation, a taxpayer with a sufficiently
small amount of annual investment may elect to deduct (or
``expense'') such costs under section 179. Present law
provides that the maximum amount a taxpayer may expense for
taxable years beginnin in 2008 is $250,000 of the cost of
qualifying property placed in service for the taxable
year.\35\ For taxable years beginning in 2009 and 2010, the
limitation is $125,000. In general, qualifying property is
defined as depreciable tangible personal property that is
purchased for use in the active conduct of a trade or
business. Off-the-shelf computer software placed in service
in taxable years beginning before 2011 is treated as
qualifying property. For taxable years beginning in 2008, the
$250,000 amount is reduced (but not below zero) by the amount
by which the cost of qualifying property placed in service
during the taxable year exceeds $800,000. For taxable years
beginning in 2009 and 2010, the $125,000 amount is reduced
(but not below zero) by the amount by which the cost of
qualifying property placed in service during the taxable year
exceeds $500,000. The $125,000 and $500,000 amounts are
indexed for inflation in taxable years beginning in 2009 and
2010.
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\35\ Additional section 179 incentives are provided with
respect to qualified property meeting applicable requirements
that is used by a business in an empowerment zone (sec.
1397A) or a renewal community (sec. 1400J), qualified section
179 Gulf Opportunity Zone property (sec. 1400N(e)), qualified
Recovery Assistance property placed in service in the Kansas
disaster area (Pub. L. No. 110-234, sec. 15345 (2008)), and
qualified disaster assistance property (sec. 179(e)).
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The amount eligible to be expensed for a taxable year may
not exceed the taxable income for a taxable year that is
derived from the active conduct of a trade or business
(determined without regard to this provision). Any amount
that is not allowed as a deduction because of the taxable
income limitation may be carried forward to succeeding
taxable years (subject to similar limitations). No general
business credit under section 38 is allowed with respect to
any amount for which a deduction is allowed under section
179. An expensing election is made under rules prescribed by
the Secretary.\36\
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\36\ Sec. 179(c)(1). Under Treas. Reg. sec. 1.179-5,
applicable to property placed in service in taxable years
beginning after 2002 and before 2008, a taxpayer is permitted
to make or revoke an election under section 179 without the
consent of the Commissioner on an amended Federal tax return
for that taxable year. This amended return must be filed
within the time prescribed by law for filing an amended
return for the taxable year. T.D. 9209, July 12, 2005.
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For taxable years beginning in 2011 and thereafter (or
before 2003), the following rules apply. A taxpayer with a
sufficiently small amount of annual investment may elect to
deduct up to $25,000 of the cost of qualifying property
placed in service for the taxable year. The $25,000 amount is
reduced (but not below zero) by the amount by which the cost
of qualifying property placed in service during the taxable
year exceeds $200,000. The $25,000 and $200,000 amounts are
not indexed for inflation. In general, qualifying property is
defined as depreciable tangible personal property that is
purchased for use in the active conduct of a trade or
business (not including off-the-shelf computer software). An
expensing election may be revoked only with consent of the
Commissioner.\37\
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\37\ Sec. 179(c)(2).
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House Bill
The provision extends the $250,000 and $800,000 amounts to
taxable years beginning in 2009.
Effective date.--The provision is effective for taxable
years beginning after December 31, 2008.
Senate Amendment
The Senate amendment is the same as the House bill.
Conference Agreement
The conference agreement follows the House bill and the
Senate amendment.
3. Five-year carryback of operating losses (secs. 1411 and
1412 of the House bill, secs. 1211 and 1212 of the Senate
amendment, sec. 1211 of the conference agreement, and
sec. 172 of the Code)
Present Law
Under present law, a net operating loss (``NOL'') generally
means the amount by which a taxpayer's business deductions
exceed its gross income. In general, an NOL may be carried
back two years and carried over 20 years to offset taxable
income in such years.\38\ NOLs offset taxable income in the
order of the taxable years to which the NOL may be
carried.\39\
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\38\Sec. 172(b)(1)(A).
\39\ Sec. 172(b)(2).
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The alternative minimum tax rules provide that a taxpayer's
NOL deduction cannot reduce the taxpayer's alternative
minimum taxable income (``AMTI'') by more than 90 percent of
the AMTI.
Different rules apply with respect to NOLs arising in
certain circumstances. A three-year carryback applies with
respect to NOLs (1) arising from casualty or theft losses of
individuals, or (2) attributable to Presidentially declared
disasters for taxpayers engaged in a farming business or a
small business. A five-year carryback applies to NOLs (1)
arising from a farming loss (regardless of whether the loss
was incurred in a Presidentially declared disaster area), (2)
certain amounts related to Hurricane Katrina, Gulf
Opportunity Zone, and Midwestern Disaster Area, or (3)
qualified disaster losses.\40\ Special rules also apply to
real estate investment trusts (no carryback), specified
liability losses (10-year carryback), and excess interest
losses (no carryback to any year preceding a corporate equity
reduction transaction). Additionally, a special rule applies
to certain electric utility companies.
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\40\ Sec. 172(b)(1)(J).
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In the case of a life insurance company, present law allows
a deduction for the operations loss carryovers and carrybacks
to the taxable year, in lieu of the deduction for net
operation losses allowed to other corporations.\41\ A life
insurance company is permitted to treat a loss from
operations (as defined under section 810(c)) for any taxable
year as an operations loss carryback to each of the three
taxable years preceding the loss year and an operations loss
carryover to each of the 15 taxable years following the loss
year.\42\ Special rules apply to new life insurance
companies.
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\41\ Secs. 810, 805(a)(5).
\42\ Sec. 810(b)(1).
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House Bill
The House bill provides an election \43\ to increase the
present-law carryback period for an applicable 2008 or 2009
NOL from two years to any whole number of years elected by
the taxpayer which is more than two and less than six. An
applicable NOL is the taxpayer's NOL for any taxable year
ending in 2008 or 2009, or if elected by the taxpayer, the
NOL for any taxable year beginning in 2008 or 2009. If an
election is made to increase the carryback period, the
applicable NOL is permanently reduced by 10 percent.
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\43\ For all elections under this provision, the common
parent of a group of corporations filing a consolidated
return makes the election, which is binding on all such
corporations.
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These provisions may be illustrated by the following
example. Taxpayer incurs a $100 NOL for its taxable year
ended January 31, 2008 and elects to carryback the NOL five
years to its taxable year ended January 31, 2003. Under the
provision, Taxpayer must first permanently reduce the NOL by
10 percent, or $10, and then may carryback the $90 NOL to its
taxable year ended January 31, 2003.
The provision also suspends the 90-percent limitation on
the use of any alternative tax NOL deduction attributable to
carrybacks of losses from taxable years ending during 2008 or
2009, and carryovers of losses to such taxable years (this
rule applies to taxable years beginning in 2008 or 2009 if an
election is in place to use such years as applicable NOLs).
For life insurance companies, the provision provides an
election to increase the present-law carryback period for an
applicable loss from operations from three years to four or
five years. An applicable loss from operations is the
taxpayer's loss from operations for any taxable year ending
in 2008 or 2009, or if elected by the taxpayer, the loss from
operations for any taxable year beginning in 2008 or 2009. If
an election is made to increase the carryback period, the
applicable loss from operations is permanently reduced by 10
percent.
The provision does not apply to: (1) any taxpayer if (a)
the Federal Government acquires, at any time,\44\ an equity
interest in the taxpayer pursuant to the Emergency Economic
Stabilization Act of 2008, or (b) the Federal Government
acquires, at any time, any warrant (or other right) to
acquire any equity interest with respect to the taxpayer
pursuant to such Act; (2) the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation;
or (3) any taxpayer that in 2008 or 2009 \45\ is a member of
the same affiliated group (as defined in section 1504 without
regard to subsection (b) thereof) as a taxpayer to which the
provision does not otherwise apply.
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\44\ For example, if the Federal government acquires an
equity interest in the taxpayer during 2010, or in later
years, the taxpayer is not entitled to the extended carryback
rules under this provision. If the carryback has previously
been claimed, amended filings may be necessary to reflect
this disallowance.
\45\For example, a taxpayer with an NOL in 2008 that in 2010
joins an affiliated group with a member in which the Federal
Government has an equity interest pursuant to the Emergency
Economic Stabilization Act of 2008 may not utilize the
extended carryback rules under this provision with regard to
the 2008 NOL. The taxpayer is required to amend prior filings
to reflect the permitted carryback period.
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Effective date.--The provision is generally effective for
net operating losses arising in taxable years ending after
December 31, 2007. The modification to the alternative tax
NOL deduction applies to taxable years ending after 1997.\46\
The modification with respect to operating loss deductions of
life insurance companies applies to losses from operations
arising in taxable years ending after December 31, 2007.
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\46\ NOL deductions from as early as taxable years ending
after 1997 may be carried forward to 2008 and utilize the
provision suspending the 90 percent limitation on alternative
tax NOL deductions.
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For an NOL or loss from operations for a taxable year
ending before the enactment of the provision, the provision
includes the following transition rules: (1) any election to
[[Page H1450]]
waive the carryback period under either sections 172(b)(3) or
810(b)(3) with respect to such loss may be revoked before the
applicable date; (2) any election to increase the carryback
period under this provision is treated as timely made if made
before the applicable date; and (3) any application for a
tentative carryback adjustment under section 6411(a) with
respect to such loss is treated as timely filed if filed
before the applicable date. For purposes of the transition
rules, the applicable date is the date which is 60 days after
the date of the enactment of the provision.
Senate Amendment
The Senate amendment is generally the same as the House
bill, except that the Senate amendment does not include the
permanent reduction of the NOL for taxpayers electing to
increase the carryback period.
Effective date.--The effective date follows the House bill.
Conference Agreement
The conference agreement provides an eligible small
business with an election to increase the present-law
carryback period for an applicable 2008 NOL from two years to
any whole number of years elected by the taxpayer that is
more than two and less than six.\47\ An eligible small
business is a taxpayer meeting a $15,000,000 gross receipts
test.\48\ An applicable NOL is the taxpayer's NOL for any
taxable year ending in 2008, or if elected by the taxpayer,
the NOL for any taxable year beginning in 2008. However, any
election under this provision may be made only with respect
to one taxable year.
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\47\ For all elections under this provision, the common
parent of a group of corporations filing a consolidated
return makes the election, which is binding on all such
corporations.
\48\ For this purpose, the gross receipt test of sec. 448(c)
is applied by substituting $15,000,000 for, $5,000,000 each
place it appears.
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Effective date.--The conference agreement provision is
effective for net operating losses arising in taxable yea
ending after December 31, 2007.
For an NOL for a taxable year ending before the enactment
of the provision, the provision includes the following
transition rules: (1) any election to waive the carryback
period under either section 172(b)(3) with respect to such
loss may be revoked before the applicable date; (2) any
election to increase the carryback period under this
provision is treated as timely made if made before the
applicable date; and (3) any application for a tentative
carryback adjustment under section 6411(a) with respect to
such loss is treated as timely filed if filed before the
applicable date. For purposes of the transition rules, the
applicable date is the date which is 60 days after the date
of the enactment of the provision.
4. Estimated tax payments (sec. 1212 of the conference
agreement and sec. 6654 of the Code)
Present Law
Under present law, the income tax system is designed to
ensure that taxpayers pay taxes throughout the year based on
their income and deductions. To the extent that tax is not
collected through withholding, taxpayers are required to make
quarterly estimated payments of tax, the amount of which is
determined by reference to the required annual payment. The
required annual payment is the lesser of 90 percent of the
tax shown on the return or 100 percent of the tax shown on
the return for the prior taxable year (110 percent if the
adjusted gross income for the preceding year exceeded
$150,000). An underpayment results if the required payment
exceeds the amount (if any) of the installment paid on or
before the due date of the installment. The period of the
underpayment runs from the due date of the installment to the
earlier of (1) the 15th day of the fourth month following the
close of the taxable year or (2) the date on which each
portion of the underpayment is made. If a taxpayer fails to
pay the required estimated tax payments under the rules, a
penalty is imposed in an amount determined by applying the
underpayment interest rate to the amount of the underpayment
for the period of the underpayment. The penalty for failure
to pay estimated tax is the equivalent of interest, which is
based on the time value of money.
Taxpayers are not liable for a penalty for the failure to
pay estimated tax in certain circumstances. The statute
provides exceptions for U.S. persons who did not have a tax
liability the preceding year, if the tax shown on the return
for the taxable year (or, if no return is filed, the tax),
reduced by withholding, is less than $1,000, or the taxpayer
is a recently retired or disabled person who satisfies the
reasonable cause exception.
House Bill
No provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement provides that the required annual
estimated tax payments of a qualified individual for taxable
years beginning in 2009 is not greater than 90 percent of the
tax liability shown on the tax return for the preceding
taxable year. A qualified individual means any individual if
the adjusted gross income shown on the tax return for the
preceding taxable year is less than $500,000 ($250,000 if
married filing separately) and the individual certifies that
at least 50 percent of the gross income shown on the return
for the preceding taxable year was income from a small trade
or business. For purposes of this provision, a small trade or
business means any trade or business that employed no more
than 500 persons, on average, during the calendar year ending
in or with the preceding taxable year.
Effective date.--The proposal is effective on the date of
enactment.
5. Modification of work opportunity tax credit (sec. 1421 of
the House bill, sec. 1221 of the Senate amendment, sec.
1221 of the conference agreement, and sec. 51 of the
Code)
Present Law
In general
The work opportunity tax credit is available on an elective
basis for employers hiring individuals from one or more of
nine targeted groups. The amount of the credit available to
an employer is determined by the amount of qualified wages
paid by the employer. Generally, qualified wages consist of
wages attributable to service rendered by a member of a
targeted group during the one-year period beginning with the
day the individual begins work for the employer (two years in
the case of an individual in the long-term family assistance
recipient category).
Targeted groups eligible for the credit
Generally an employer is eligible for the credit only for
qualified wages paid to members of a targeted group.
(1) Families receiving TANF
An eligible recipient is an individual certified by a
designated local employment agency (e.g., a State employment
agency) as being a member of a family eligible to receive
benefits under the Temporary Assistance for Needy Families
Program (``TANF'') for a period of at least nine months part
of which is during the 18-month period ending on the hiring
date. For these purposes, members of the family are defined
to include only those individuals taken into account for
purposes of determining eligibility for the TANF.
(2) Qualified veteran
There are two subcategories of qualified veterans related
to eligibility for Food stamps and compensation for a
service-connected disability.
Food stamps
A qualified veteran is a veteran who is certified by the
designated local agency as a member of a family receiving
assistance under a food stamp program under the Food Stamp
Act of 1977.
Entitled to compensation for a service-connection
disability
A qualified veteran also includes an individual who is
certified as entitled to compensation for a service-connected
disability and: (1) having a hiring date which is not more
than one year after having been discharged or released from
active duty in the Armed Forces of the United States; or (2)
having been unemployed for six months or more (whether or not
consecutive) during the one-year period ending on the date of
hiring.
Definitions
For these purposes, being entitled to compensation for a
service-connected disability is defined with reference to
section 101 of Title 38, U.S. Code, which means having a
disability rating of 10 percent or higher for service
connected injuries.
For these purposes, a veteran is an individual who has
served on active duty (other than for training) in the Armed
Forces for more than 180 days or who has been discharged or
released from active duty in the Armed Forces for a service-
connected disability. However, any individual who has served
for a period of more than 90 days during which the individual
was on active duty (other than for training) is not a
qualified veteran if any of this active duty occurred during
the 60-day period ending on the date the individual was hired
by the employer. This latter rule is intended to prevent
employers who hire current members of the armed services (or
those departed from service within the last 60 days) from
receiving the credit.
(3) Qualified ex-felon
A qualified ex-felon is an individual certified as: (1)
having been convicted of a felony under any State or Federal
law; and (2) having a hiring date within one year of release
from prison or the date of conviction.
(4) Designated community residents
A designated community resident is an individual certified
as being at least age 18 but not yet age 40 on the hiring
date and as having a principal place of abode within an
empowerment zone, enterprise community, renewal community or
a rural renewal community. For these purposes, a rural
renewal county is a county outside a metropolitan statistical
area (as defined by the Office of Management and Budget)
which had a net population loss during the five-year periods
1990-1994 and 1995-1999. Qualified wages do not include wages
paid or incurred for services performed after the individual
moves outside an empowerment zone, enterprise community,
renewal community or a rural renewal community.
(5) Vocational rehabilitation referral
A vocational rehabilitation referral is an individual who
is certified by a designated local agency as an individual
who has a
[[Page H1451]]
physical or mental disability that constitutes a substantial
handicap to employment and who has been referred to the
employer while receiving, or after completing: (a) vocational
rehabilitation services under an individualized, written plan
for employment under a State plan approved under the
Rehabilitation Act of 1973; (b) under a rehabilitation plan
for veterans carried out under Chapter 31 of Title 38, U.S.
Code; or (c) an individual work plan developed and
implemented by an employment network pursuant to subsection
(g) of section 1148 of the Social Security Act. Certification
will be provided by the designated local employment agency
upon assurances from the vocational rehabilitation agency
that the employee has met the above conditions.
(6) Qualified summer youth employee
A qualified summer youth employee is an individual: (a) who
performs services during any 90-day period between May 1 and
September 15; (b) who is certified by the designated local
agency as being 16 or 17 years of age on the hiring date; (c)
who has not been an employee of that employer before; and (d)
who is certified by the designated local agency as having a
principal place of abode within an empowerment zone,
enterprise community, or renewal community (as defined under
Subchapter U of Subtitle A, Chapter 1 of the Internal Revenue
Code). As with designated community residents, no credit is
available on wages paid or incurred for service performed
after the qualified summer youth moves outside of an
empowerment zone, enterprise community, or renewal community.
If, after the end of the 90-day period, the employer
continues to employ a youth who was certified during the 90-
day period as a member of another targeted group, the limit
on qualified first year wages will take into account wages
paid to the youth while a qualified summer youth employee.
(7) Qualified food stamp recipient
A qualified food stamp recipient is an individual at least
age 18 but not yet age 40 certified by a designated local
employment agency as being a member of a family receiving
assistance under a food stamp program under the Food Stamp
Act of 1977 for a period of at least six months ending on the
hiring date. In the case of families that cease to be
eligible for food stamps under section 6(o) of the Food Stamp
Act of 1977, the six-month requirement is replaced with a
requirement that the family has been receiving food stamps
for at least three of the five months ending on the date of
hire. For these purposes, members of the family are defined
to include only those individuals taken into account for
purposes of determining eligibility for a food stamp program
under the Food Stamp Act of 1977.
(8) Qualified SSI recipient
A qualified SSI recipient is an individual designated by a
local agency as receiving supplemental security income
(``SSI'') benefits under Title XVI of the Social Security Act
for any month ending within the 60-day period ending on the
hiring date.
(9) Long-term family assistance recipients
A qualified long-term family assistance recipient is an
individual certified by a designated local agency as being:
(a) a member of a family that has received family assistance
for at least 18 consecutive months ending on the hiring date;
(b) a member of a family that has received such family
assistance for a total of at least 18 months (whether or not
consecutive) after August 5, 1997 (the date of enactment of
the welfare-to-work tax credit\49\ if the individual is hired
within two years after the date that the 18-month total is
reached; or (c) a member of a family who is no longer
eligible for family assistance because of either Federal or
State time limits, if the individual is hired within two
years after the Federal or State time limits made the family
ineligible for family assistance.
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\49\ The welfare-to-work tax credit was consolidated into the
work .opportunity tax credit in the Tax Relief and Health
Care Act of 2006, for qualified individuals who begin to work
for an employer after December 31, 2006.
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Qualified wages
Generally, qualified wages are defined as cash wages paid
by the employer to a member of a targeted group. The
employer's deduction for wages is reduced by the amount of
the credit.
For purposes of the credit, generally, wages are defined by
reference to the FUTA definition of wages contained in sec.
3306(b) (without regard to the dollar limitation therein
contained). Special rules apply in the case of certain
agricultural labor and certain railroad labor.
Calculation of the credit
The credit available to an employer for qualified wages
paid to members of all targeted groups except for long-term
family assistance recipients equals 40 percent (25 percent
for employment of 400 hours or less) of qualified first-year
wages. Generally, qualified first-year wages are qualified
wages (not in excess of $6,000) attributable to service
rendered by a member of a targeted group during the one-year
period beginning with the day the individual began work for
the employer. Therefore, the maximum credit per employee is
$2,400 (40 percent, of the first $6,000 of qualified first-
year wages). With respect to qualified summer youth
employees, the maximum credit is $1,200 (40 percent of the
first $3,000 of qualified first-year wages). Except for long-
term family assistance recipients, no credit is allowed for
second-year wages.
In the case of long-term family assistance recipients, the
credit equals 40 percent (25 percent for employment of 400
hours or less) of $10,000 for qualified first-year wages and
50 percent of the first $10,000 of qualified second-year
wages. Generally, qualified second-year wages are qualified
wages (not in excess of $10,000) attributable to service
rendered by a member of the long-term family assistance
category during the one-year period beginning on the day
after the one-year period beginning with the day the
individual began work for the employer. Therefore, the
maximum credit per employee is $9,000 (40 percent of the
first $10,000 of qualified first-year wages plus 50 percent
of the first $10,000 of qualified second-year wages).
In the case of a qualified veteran who is entitled to
compensation for a service connected disability, the credit
equals 40 percent of $12,000 of qualified first-year wages.
This expanded definition of qualified first-year wages does
not apply to the veterans qualified with reference to a food
stamp program, as defined under present law.
Certification rules
An individual is not treated as a member of a targeted
group unless: (1) on or before the day on which an individual
begins work for an employer, the employer has received a
certification from a designated local agency that such
individual is a member of a targeted group; or (2) on or
before the day an individual is offered employment with the
employer, a prescreening notice is completed by the employer
with respect to such individual, and not later than the 28th
day after the individual begins work for the employer, the
employer submits such notice, signed by the employer and the
individual under penalties of perjury, to the designated
local agency as part of a written request for certification.
For these purposes, a pre-screening notice is a document (in
such form as the Secretary may prescribe) which contains
information provided by the individual on the basis of which
the employer believes that the individual is a member of a
targeted group.
Minimum employment period
No credit is allowed for qualified wages paid to employees
who work less than 120 hours in the first year of employment.
Other rules
The work opportunity tax credit is not allowed for wages
paid to a relative or dependent of the taxpayer. No credit is
allowed for wages paid to an individual who is a more than
fifty percent owner of the entity. Similarly, wages paid to
replacement workers during a strike or lockout are not
eligible for the work opportunity tax credit. Wages paid to
any employee during any period for which the employer
received on-the-job training program payments with respect to
that employee are not eligible for the work opportunity tax
credit. The work opportunity tax credit generally is not
allowed for wages paid to individuals who had previously been
employed by the employer. In addition, many other technical
rules apply.
Expiration
The work opportunity tax credit is not available for
individuals who begin work for an employer after August 31,
2011.
house bill
In general
The provision creates a new targeted group for the work
opportunity tax credit. That new category is unemployed
veterans and disconnected youth who begin work for the
employer in 2009 or 2010.
An unemployed veteran is defined as an individual certified
by the designated local agency as someone who: (1) has served
on active duty (other than for training) in the Armed Forces
for more than 180 days or who has been discharged or released
from active duty in the Armed Forces for a service-connected
disability; (2) has been discharged or released from active
duty in the Armed Forces during 2008, 2009, or 2010; and (3)
has received unemployment compensation under State or Federal
law for not less than four weeks during the one-year period
ending on the hiring date.
A disconnected youth is defined as an individual certified
by the designated local agency as someone: (1) at least age
16 but not yet age 25 on the hiring date; (2) not regularly
attending any secondary, technical, or post-secondary school
during the six-month period preceding the hiring date; (3)
not regularly employed during the six-month period preceding
the hiring date; and (4) not readily employable by reason of
lacking a sufficient number of skills.
Effective date
The provisions are effective for individuals who begin work
for an employer after December 31, 2008.
senate amendment
The Senate amendment is the same as the House bill except
that the otherwise applicable definition of unemployed
veterans is expanded to include individuals who were
discharged or released from active duty in the Armed Forces
during the period beginning on September 1, 2001 and ending
on December 31, 2010.
conference agreement
The conference agreement follows the House bill and the
Senate amendment with one modification. Under this
modification an unemployed veteran for purposes of this new
targeted group is defined below:
[[Page H1452]]
An unemployed veteran is defined as an individual certified
by the designated local agency as someone who: (1) has served
on active duty (other than for training) in the Armed Forces
for more than 180 days or who has been discharged or released
from active duty in the Armed Forces for a service-connected
disability; (2) has been discharged or released from active
duty in the Armed Forces during the five-year period ending
on the hiring date; and (3) has received unemployment
compensation under State or Federal law for not less than
four weeks during the one-year period ending on the hiring
date.
For purposes of the disconnected youths, it is intended
that a low-level of formal education may satisfy the
requirement that an individual is not readily employable by
reason of lacking a sufficient number of skills. Further, it
is intended that the Internal Revenue Service, when providing
general guidance regarding the various new criteria, shall
take into account the administrability of the program by the
State agencies.
6. Clarification of regulations related to limitations on
certain built-in losses following an ownership change
(sec. 1431 of the House bill, sec. 1281 of the Senate
amendment, sec. 1261 of the conference agreement, and
sec. 382 of the Code)
present law
Section 382 limits the extent to which a ``loss
corporation'' that experiences an ``ownership change'' may
offset taxable income in any post-change taxable year by pre-
change net operating losses, certain built-in losses, and
deductions attributable to the pre-change period.\50\ In
general, the amount of income in any post-change year that
may be offset by such net operating losses, built-in losses
and deductions is limited to an amount (referred to as the
``section 382 limitation'') determined by multiplying the
value of the loss corporation immediately before the
ownership change by the long-term tax-exempt interest.\51\
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\50\ Sec. 383 imposes similar limitations, under regulations,
on the use of carryforwards of general business credits,
alternative minimum tax credits, foreign tax credits, and net
capital loss carryforwards. Sec. 383 generally refers to sec.
382 for the meanings of its terms, but requires appropriate
adjustments to take account of its application to credits and
net capital losses.
\51\ If the loss corporation had a ``net unrealized built-in
gain'' (or NUBIG) at the time of the ownership change, then
the sec. 382 limitation for any taxable year may be increased
by the amount of the ``recognized built-in gains'' (discussed
further below) for that year. A NUBIG is defined as the
amount by which the fair market value of the assets of the
corporation immediately before an ownership change exceeds
the aggregate adjusted basis of such assets at such time.
However, if the amount of the NUBIG does not exceed the
lesser of (i) 15 percent of the fair market value of the
corporation's assets or (ii) $10,000,000, then the amount of
the NUBIG is treated as zero. Sec. 382(h)(1).
---------------------------------------------------------------------------
A ``loss corporation'' is defined as a corporation entitled
to use a net operating loss carryover or having a net
operating loss carryover for the taxable year in which the
ownership change occurs. Except to the extent provided in
regulations, such term includes any corporation with a ``net
unrealized built-in loss'' (or NUBIL) \52\ defined as the
amount by which the fair market value of the assets of the
corporation immediately before an ownership change is less
than the aggregate adjusted basis of such assets at such
time. However, if the amount of the NUBIL does not exceed the
lesser of (i) 15 percent of the fair market value of the
corporation's assets or (ii) $10,000,000, then the amount of
the NUBIL is treated as zero.\53\
---------------------------------------------------------------------------
\52\ Sec. 382(k)(1).
\53\ Sec. 382(h)(3).
---------------------------------------------------------------------------
An ownership change is defined generally as an increase by
more than 50-percentage points in the percentage of stock of
a loss corporation that is owned yAny one or more five-
percent (or greater) shareholders (as defined) within a
three-year period.\54\ Treasury regulations provide generally
that this measurement is to be made as of any ``testing
date,'' which is any date on which the ownership of one or
more persons who were or who become five-percent shareholders
increase.\55\
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\54\ Determinations of the percentage of stock of any
corporation held by any person are made on the basis of
value. Sec. 382(k)(6)(C).
\55\ See Treas. Reg. sec. 1.382-2(a)(4) (providing that ``a
loss corporation is required to determine whether an
ownership change has occurred immediately after any owner
shift, or issuance or transfer (including an issuance or
transfer described in Treas. Reg. sec. 1.382-4(d)(8)(i) or
(ii)) of an option with respect to stock of the loss
corporation that is treated as exercised under Treas. Reg.
sec. 1.382-4(d)(2)'' and defining a ``testing date'' as
``each date on which a loss corporation is required to make a
determination of whether an ownership change has occurred'')
and Temp. Treas. Reg. sec. 1.382-2T(e)(1) (defining an
``owner shift'' as ``any change in the ownership of the stock
of a loss corporation that affects the percentage of such
stock owned by any 5-percent shareholder''). Treasury
regulations under section 382 provide that, in computing
stock ownership on specified testing dates, certain
unexercised options must be treated as exercised if certain
ownership, control, or income tests are met. These tests are
met only if ``a principal purpose of the issuance, transfer,
or structuring of the option (alone or in combination with
other arrangements) is to avoid or ameliorate the impact of
an ownership change of the loss corporation.'' Treas. Reg.
sec. 1.382-4(d). Compare prior temporary regulations, Temp.
Reg. sec. 1.382-2T(h)(4) (``Solely for the purpose of
determining whether there is an ownership change on any
testing date, stock of the loss corporation that is subject
to an option shall be treated as acquired on any such date,
pursuant to an exercise of the option by its owner on that
date, if such deemed exercise would result in an ownership
change.''). Internal Revenue Service Notice 2008-76, I.R.B.
2008-39 (September 29, 2008), released September 7, 2008,
provides that the Treasury Department intends to issue
regulations modifying the term ``testing date'' under sec.
382 to exclude any date on or after which the United States
acquires stock or options to acquire stock in certain
corporations with respect to which there is a ``Housing Act
Acquisition'' pursuant to the Housing and Economic Recovery
Act of 2008 (P.L. 110-289). The Notice states that the
regulations will apply on and after September 7, 2008, unless
and until there is additional guidance. Internal Revenue
Service Notice 2008-84, I.R.B. 2008-41 (October 14, 2008),
provides that the Treasury Department intends to issue
regulations modifying the term ``testing date'' under sec.
382 to exclude any date as of the close of which the United
States owns, directly or indirectly, a more than 50 percent
interest in a loss corporation, which regulations will apply
unless and until there is additional guidance. Internal
Revenue Service Notice 2008-100, 2008-14 I.R.B. 1081
(released October 15, 2008) provides that the Treasury
Department intends to issue regulations providing, among
other things, that certain instruments acquired by the
Treasury Department under the Capital Purchase Program (CPP)
pursuant to the Emergency Economic Stabilization Act of 2008
(P.L. 100-343) (''EESA'') shall not be treated as stock for
certain purposes. The Notice also provides that certain
capital contributions made by Treasury pursuant to the CPP
shall not be considered to have been made as part of a plan
the principal purpose of which was to avoid or increase any
sec. 382 limitation (for purposes of section 382(1)(1)). The
Notice states that taxpayers may rely on the rules described
unless and until there is further guidance; and that any
contrary guidance will not apply to instruments (i) held by
Treasury that were acquired pursuant to the CCP prior to
publication of that guidance, or (ii) issued to Treasury
pursuant to the CCP under written binding contracts entered
into prior to the publication of that guidance. Internal
Revenue Service Notice 2009-14, 2009-7 I.R.B. 1 (January 30,
2009) amplifies and supersedes Notice 2008-100, and provides
additional guidance regarding the application of sec. 382 and
other provisions of law to corporations whose instruments are
acquired by the Treasury Department under certain programs
pursuant to EESA.
---------------------------------------------------------------------------
Section 382(h) governs the treatment of certain built-in
losses and built-in gains recognized with respect to assets
held by the loss corporation at the time of the ownership
change. In the case of a loss corporation that has a NUBIL
(measured immediately before an ownership change), section
382(h)(1) provides that any ``recognized built-in loss'' (or
RBIL) for any taxable year during a ``recognition period''
(consisting of the five years beginning on the ownership
change date) is subject to the section 382 limitation in the
same manner as if it were a pre-change net operating
loss.\56\ An RBIL is defined for this purpose as any loss
recognized during the recognition period on the disposition
of any asset held by the loss corporation immediately before
the ownership change date, to the extent that such loss is
attributable to an excess of the adjusted basis of the asset
on the change date over its fair market value on that
date.\57\ An RBIL also includes any amount allowable as
depreciation, amortization or depletion during the
recognition period, to the extent that such amount is
attributable to excess of the adjusted basis of the asset
over its fair market value on the ownership change day.\58\
In addition, any amount that is allowable as a deduction
during the recognition period (determined without regard to
any carryover) but which is attributable to periods before
the ownership change date is treated as an RBIL for the
taxable year in which it is allowable as a deduction.\59\
---------------------------------------------------------------------------
\56\ Sec. 382(h)(2). The total amount of the loss
corporation's RBILs that are subject to the section 382
limitation cannot exceed the amount of the corporation's
NUBIL.
\57\ Sec. 382(h)(2)(B).
\58\ Id.
\59\ Sec. 382(h)(6)(B).
---------------------------------------------------------------------------
As indicated above, section 382(h)(1) provides in the case
of a loss corporation that has a NUBIG that the section 382
limitation may be increased for any taxable year during the
recognition period by the amount of recognized built-in gains
(or RBIGs) for such taxable year.\60\ An RBIG is defined for
this purpose as any gain recognized during the recognition
period on the disposition of any asset held by the loss
corporation immediately before the ownership change date, to
the extent that such gain is attributable to an excess of the
fair market value of the asset on the change date over its
adjusted basis on that date.\61\ In addition, any item of
income that is properly taken into account during the
recognition period but which is attributable to periods
before the ownership change date is treated as an RBIG for
the taxable year in which it is properly taken into
account.\62\
---------------------------------------------------------------------------
\60\ The total amount of such increases cannot exceed the
amount of the corporation's NUBIG.
\61\ Sec. 382(h)(2)(A).
\62\ Sec. 382(h)(6)(A).
---------------------------------------------------------------------------
Internal Revenue Service Notice 2003-65 \63\ provides two
alternative safe harbor approaches for the identification of
built-in items for purposes of section 382(h): the ``1374
approach'' and the ``338. approach''
---------------------------------------------------------------------------
\63\ 2003-2 C.B. 747.
---------------------------------------------------------------------------
Under the 1374 approach,\64\ NUBIG or NUBIL is the net
amount of gain or loss that would be recognized in a
hypothetical sale of the assets of the loss corporation
immediately before the ownership change.\65\ The
[[Page H1453]]
amount of gain or loss recognized during the recognition
period on the sale or exchange of an asset held at the time
of the ownership change is RBIG or RBIL, respectively, to the
extent it is attributable to a difference between the
adjusted basis and the fair market value of the asset on the
change date, as described above. However, the 1374 approach
generally relies on the accrual method of accounting to
identify items of income or deduction as RBIG or RBIL,
respectively. Generally, items of income or deduction
properly included in income or allowed as a deduction during
the recognition period are considered attributable to period
before the change date (and thus are treated as RBIG or RBIL,
respectively), if a taxpayer using an accrual method of
accounting would have included the item in income or been
allowed a deduction for the item before the change date.
However, the 1374 approach includes a number of exceptions to
this general rule, including a special rule dealing with bad
debt deductions under section 166. Under this special rule,
any deduction item properly taken into account during the
first 12 months of the recognition period as a bad debt
deduction under section 166 is treated as RBIL if the item
arises from a debt owed to the loss corporation at the
beginning of the recognition period (and deductions for such
items properly taken into account after the first 12 months
of the recognition period are not RBILs).\66\
---------------------------------------------------------------------------
\64\ The 1374 approach generally incorporates rules similar
to those of section 1374(d) and the Treasury regulations
thereunder in calculating NUBIG and NUBIL and identifying
RBIG and RBIL.
\65\ More specifically, NUBIG or NUBIL is calculated by
determining the amount that would be realized if immediately
before the ownership change the loss corporation had sold all
of its assets, including goodwill, at fair market value to a
third party that assumed all of its liabilities, decreased by
the sum of any deductible liabilities of the loss corporation
that would be included in the amount realized on the
hypothetical sale and the loss corporation's aggregate
adjusted basis in all of its assets, increased or decreased
by the corporation's section 481 adjustments that would be
taken into account on a hypothetical sale, and increased by
any RBIL that would not be allowed as a deduction under
section 382, 383 or 384 on the hypothetical sale.
\66\ Notice 2003-65, section III.B.2.b.
---------------------------------------------------------------------------
The 338 approach identifies items of RBIG and RBIL
generally by comparing the loss corporation's actual items of
income, gain, deduction and loss with those that would have
resulted if a section 338 election had been made with respect
to a hypothetical purchase of all of the outstanding stock of
the loss corporation on the change date. Under the 338
approach, NUBIG or NUBIL is calculated in the same manner as
it is under the 1374 approach.\67\ The 338 approach
identifies RBIG or RBIL by comparing the loss corporation's
actual items of income, gain, deduction and loss with the
items of income, gain, deduction and loss that would result
if a section 338 election had been made for the hypothetical
purchase. The loss corporation is treated for this purpose as
using those accounting methods that the loss corporation
actually uses. The 338 approach does not include any special
rule with regard to bad debt deductions under section 166.
---------------------------------------------------------------------------
\67\ Accordingly, unlike the case in which a section 338
election is actually made, contingent consideration
(including a contingent liability) is taken into account in
the initial calculation of NUBIG or NUBIL, and no further
adjustments are made to reflect subsequent changes in deemed
consideration.
---------------------------------------------------------------------------
Section 166 generally allows a deduction in respect of any
debt that becomes worthless, in whole or in part, during the
taxable year.\68\ The determination of whether a debt is
worthless, in whole or in part, is a question of fact.
However, in the case of a bank or other corporation that is
subject to supervision by Federal authorities, or by State
authorities maintaining substantially equivalent standards,
the Treasury regulations under section 166 provide a
presumption of worthlessness to the extent that a debt is
charged off during the taxable year pursuant to a specific
order of such an authority or in accordance with established
policies of such an authority (and in the latter case, the
authority confirms in writing upon the first subsequent audit
of the bank or other corporation that the charge-off would
have been required if the audit had been made at the time of
the charge-off). The presumption does not apply if the
taxpayer does not claim the amount so charged off as a
deduction for the taxable year in which the charge-off takes
place. In that case, the charge-off is treated as having been
involuntary; however, in order to claim the section 166
deduction in a later taxable year, the taxpayer must produce
sufficient evidence to show that the debt became partially
worthless in the later year or became recoverable only in
part subsequent to the taxable year of the charge-off, as the
case may be, and to the extent that the deduction claimed in
the later year for a partially worthless debt was not
involuntarily charged off in prior taxable years, it was
charged off in the later taxable year.\69\
---------------------------------------------------------------------------
\68\ Section 166 does not apply, however, to a debt which is
evidenced by a security, defined for this purpose (by cross-
reference to section 165(g)(2)(C)) as a bond, debenture, note
or certificate or other evidence of indebtedness issued by a
corporation or by a government or political subdivision
thereof, with interest coupons or in registered form. Sec.
166(e).
\69\ See Treas. Reg. sec. 1.166-2(d)(1) and (2).
---------------------------------------------------------------------------
The Treasury regulations also permit a bank (generally as
defined for purposes of section 581, with certain
modifications) that is subject to supervision by Federal
authorities, or State authorities maintaining substantially
equivalent standards, to make a ``conformity election'' under
which debts charged off for regulatory purposes during a
taxable year are conclusively presumed to be worthless for
tax purposes to the same extent, provided that the charge-off
results from a specific order of the regulatory authority or
corresponds to the institution's classification of the debt
as a ``loss asset'' pursuant to loan loss classification
standards that are consistent with those of certain specified
bank regulatory, authorities. The conformity election is
treated as the adoption of a method of accounting.\70\
---------------------------------------------------------------------------
\70\ See Treas. Reg. sec. 1.166-2(d)(3); cf. Priv. Let. Rul.
9248048 (July 7, 1992); Tech. Ad. Mem. 9122001 (Feb. 8,
1991).
---------------------------------------------------------------------------
Internal Revenue Service Notice 2008-83,\71\ released on
October 1, 2008, provides that ``[f]or purposes of section
382(h), any deduction properly allowed after an ownership
change (as defined in section 382(g)) to a bank with respect
to losses on loans or bad debts (including any deduction for
a reasonable addition to a reserve for bad debts) shall ne
treated as a built-in loss or a deduction that is
attributable to periods before the change date.'' \72\ The
Notice further states that the Internal Revenue Service and
the Treasury Department are studying the proper treatment
under section 382(h) of certain items of deduction or loss
allowed after an ownership change to a corporation that is a
bank (as defined in section 581) both immediately before and
after the change date, and that any such corporation may rely
on the treatment set forth in Notice 2008-83 unless and until
there is additional guidance.
---------------------------------------------------------------------------
\71\ 2008-42 I.R.B. 2008-42 (Oct. 20, 2008).
\72\ Notice 2008-83, section 2.
---------------------------------------------------------------------------
House Bill
The provision states that Congress finds as follows: (1)
The delegation of authority to the Secretary of the Treasury,
or his delegate, under section 382(m) does not authorize the
Secretary to provide exemptions or special rules that are
restricted to particular industries or classes of taxpayers;
(2) Internal Revenue Service Notice 2008-83 is inconsistent
with the congressional intent in enacting such section
382(m); (3) the legal authority to prescribe Notice 2008-83
is doubtful; (4) however, as taxpayers should generally be
able to rely on guidance issued by the Secretary of the
Treasury, legislation is necessary to clarify the force and
effect of Notice 200883 and restore the proper application
under the Internal Revenue Code of the limitation on built-in
losses following an ownership change of a bank.
Under the provision, Treasury Notice 2008-83 shall be
deemed to have the force and effect of law with respect to
any ownership change (as defined in section 382(g)) occurring
on or before January 16, 2009, and with respect to any
ownership change (as so defined) which occurs after January
16, 2009, if such change (1) is pursuant to a written binding
contract entered in to on or before such date or (2) is
pursuant to a written agreement entered into on or before
such date and such agreement was described on or before such
date in a public announcement or in a filing with the
Securities and Exchange Commission required by reason of such
ownership change, but shall otherwise have no force or effect
with respect to any ownership change after such date.
Effective date.--The provision is effective on the date of
enactment.
Senate Amendment
The Senate amendment is the same as the House bill.
Conference Agreement
The conference agreement follows the House bill and the
Senate amendment.
7. Treatment of certain ownership changes for purposes of
limitations on net operating loss carryforwards and
certain built-in losses (sec. 1262 of the conference
agreement and sec. 382 of the Code)
Present Law
Section 382 limits the extent to which a ``loss
corporation'' that experiences an ``ownership change'' may
offset taxable income in any post-change taxable year by pre-
change net orating losses, certain built-in losses, and
deductions attributable to the pre-change period.\73\ In
general, the amount of income in any post-change year that
may be offset by such net operating losses, built-in losses
and deductions is limited to an amount (referred to as the
``section 382 limitation'') determined by multiplying the
value of the loss corporation immediately before the
ownership change by the long-term tax-exempt interest
rate.\74\
---------------------------------------------------------------------------
\73\ Section 383 imposes similar limitations, under
regulations, on the use of carryforwards of general business
credits, alternative minimum tax credits, foreign tax
credits, and net capital loss carryforwards. Section 383
generally refers to section 382 for the meanings of its
terms, but requires appropriate adjustments to take account
of its application to credits and net capital losses.
\74\ If the loss corporation had a ``net unrealized built in
gain'' (or NUBIG) at the time of the ownership change, then
the section 382 limitation for any taxable year may be
increased by the amount of the ``recognized built-in gains''
(discussed further below) for that year. A NUBIG is defined
as the amount by which the fair market value of the assets of
the corporation immediately before an ownership change
exceeds the aggregate adjusted basis of such assets at such
time. However, if the amount of the NUBIG does not exceed the
lesser of (i) 15 percent of the fair market value of the
corporation's assets or (ii) $10,000,000, then the amount of
the NUBIG is treated as zero. Sec. 382(h)(1).
---------------------------------------------------------------------------
A ``loss corporation'' is defined as a corporation entitled
to use a net operating loss carryover or having a net
operating loss carryover for the taxable year in which the
ownership change occurs. Except to the extent provided in
regulations, such term includes any corporation with a ``net
unrealized built-in loss'' (or NUBIL),\75\ defined as the
amount by which the fair market value of the assets of the
corporation immediately before an ownership change is less
than the aggregate adjusted basis of such assets at such
time. However, if the amount of the NUBIL does not exceed the
lesser of (i) 15 percent of the fair market value of the
corporation's assets or (ii) $10,000,000, then the amount of
the NUBIL is treated as zero.\76\
---------------------------------------------------------------------------
\75\ Sec. 382(k)(1).
\76\ Sec. 382(h)(3).
---------------------------------------------------------------------------
[[Page H1454]]
An ownership change is defined generally as an increase by
more than 50-percentage points in the percentage of stock of
a loss corporation that is owned by any one or more five-
percent (or greater) shareholders (as defined) within a three
year period.\77\ Treasury regulations provide generally that
this measurement is to be made as of any ``testing date,''
which is any date on which the ownership of one or more
persons who were or who become five-percent shareholders
increases.\78\
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\77\ Determinations of the percentage of stock of any
corporation held by any person are made on the basis of
value. Sec. 382(k)(6)(C).
\78\ See Treas. Reg. sec. 1.382-2(a)(4) (providing that ``a
loss corporation is required to determine whether an
ownership change has occurred immediately after any owner
shift, or issuance or transfer (including an issuance or
transfer described in Treas. Reg. sec. 1.382-4(d)(8)(i) or
(ii)) of an option with respect to stock of the loss
corporation that is treated as exercised under Treas. Reg.
sec. 1.382-4(d)(2)'' and defining a ``testing date'' as
``each date on which a loss corporation is required to make a
determination of whether an ownership change has occurred'')
and Temp. Treas. Reg. sec. I .382-2T(e)(1) (defining an
``owner shift'' as ``any change in the ownership of the stock
of a loss corporation that affects percentage of such stock
owned by any 5-percent shareholder''). Treasury regulations
under section 382 provide that, in computing stock ownership
on specified testing dates, certain unexercised options must
be treated as exercised if certain ownership, control, or
income tests are met. These tests are met only if ``a
principal purpose of the issuance, transfer, or structuring
of the option (alone or in combination with other
arrangements) is to avoid or ameliorate the impact of an
ownership change of the loss corporation.'' Treas. Reg. sec.
1.382-4(d). Compare prior temporary regulations, Temp. Reg.
sec. 1.382-2T(h)(4) (``Solely for the purpose of determining
whether there is an ownership change on any testing date,
stock of the loss corporation that is subject to an option
shall be treated as acquired on any such date, pursuant to an
exercise of the option by its owner on that date, if such
deemed exercise would result in an ownership change.'').
Internal Revenue Service Notice 2008-76, I.R.B. 2008-39
(September 29, 2008), released September 7, 2008, provides
that the Treasury Department intends to issue regulations
modifying the term ``testing date'' under section 382 to
exclude any date on or after which the United States acquires
stock or options to acquire stock in certain corporations
with respect to which there is a ``Housing Act Acquisition''
pursuant to the Housing and Economic Recovery Act of 2008
(P.L. 110-289). The Notice states that the regulations will
apply on and after September 7, 2008, unless and until there
is additional guidance. Internal Revenue Service Notice 2008-
84, I.R.B. 2008-41 (October 14, 2008), provides that the
Treasury Department intends to issue regulations modifying
the term ``testing date'' under section 382 to exclude any
date as of the close of which the United States owns,
directly or indirectly, a more than 50 percent interest in a
loss corporation, which regulations will apply unless and
until there is additional guidance. Internal Revenue Service
Notice 2008-100, 2008-14 I.R.B. 1081 (released October 15,
2008) provides that the Treasury Department intends to issue
regulations providing, among other things, that certain
instruments acquired by the Treasury Department under the
Capital Purchase Program (CPP) pursuant to the Emergency
Economic Stabilization Act of 2008 (P.L. 100-
343)(''EESA'')shall not be treated as stock for certain
purposes. The Notice also provides that certain capital
contributions made by Treasury pursuant to the CPP shall not
be considered to have been made as part of a plan the
principal purpose of which was to avoid or increase any
section 382 limitation (for purposes of section 382(1)(1)).
The Notice states that taxpayers may rely on the rules
described unless and until there is further guidance; and
that any contrary guidance will not apply to instruments (i)
held by Treasury that were acquired pursuant to the CCP prior
to publication of that guidance, or (ii) issued to Treasury
pursuant to the CCP under written binding contracts entered
into prior to the publication of that guidance. Internal
Revenue Service Notice 2009-14, 2009-7 I.R.B. 1 (January 30,
2009) amplifies and supersedes Notice 2008-100, and provides
additional guidance regarding the application of section 382
and other provisions of law to corporations whose instruments
are acquired by the Treasury Department under certain
programs pursuant to EESA.
---------------------------------------------------------------------------
House Bill
No provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement amends section 382 of the Code to
provide an exception from the application of the section 382
limitation. Under the provision, the section 382 limitation
that would otherwise arise as a result of an ownership change
shall not apply in the case of an ownership change that
occurs pursuant to a restructuring plan of a taxpayer which
is required under a loan agreement or commitment for a line
of credit entered into with the Department of the Treasury
under the Emergency Economic Stabilization Act of 2008, and
is intended to result in a rationalization of the costs,
capitalization, and capacity with respect to the
manufacturing workforce of, and suppliers to, the taxpayer
and its subsidiaries.\79\
---------------------------------------------------------------------------
\79\ This exception shall not apply in the case of any
subsequent ownership change unless such subsequent ownership
change also meets the requirements of the exception.
---------------------------------------------------------------------------
However, an ownership change that would otherwise be
excepted from the section 382 limitation under the provision
will instead remain subject to the section 382 limitation if,
immediately after such ownership change, any person (other
than a voluntary employees' beneficiary association within
the meaning of section 501(c)(9)) owns stock of the new loss
corporation possessing 50 percent or more of the total
combined voting power of all classes of stock entitled to
vote or of the total value of the stock of such corporation.
For purposes of this rule, persons who bear a relationship to
one another described in section 267(b) or 707(b)(1), or who
are members of a group of persons acting in concert, are
treated as a single person.
The exception from the application of the section 382
limitation under the provision. not change the fact that an
ownership change has occurred for other purposes of section
382.\80\
---------------------------------------------------------------------------
\80\ For example, an ownership change has occurred for
purposes of determining the testing period under section
382(i)(2).
---------------------------------------------------------------------------
Effective date.--The conference agreement applies to
ownership changes after the date of enactment.
8. Deferral of certain income from the discharge of
indebtedness (sec. 1231 of the Senate amendment, sec.
1231 of the conference agreement, and sec. 108 of the
Code)
Present Law
In general, gross income includes income that is realized
by a debtor from the discharge of indebtedness, subject to
certain exceptions for debtors in title 11 bankruptcy cases,
insolvent debtors, certain student loans, certain farm
indebtedness, certain real property business indebtedness,
and certain qualified principal residence indebtedness.\81\
In cases involving discharges of indebtedness that are
excluded from gross income under the exceptions to the
general rule, taxpayers generally are required to reduce
certain tax attributes, including net operating losses,
general business credits, minimum tax c its, capital loss
carryovers, and basis in property, by the amount of the
discharge of indebtedness.\82\
---------------------------------------------------------------------------
\81\ See sections 61(a)(12) and 108. But see sec. 102 (a debt
cancellation which constitutes a gift or bequest is not
treated as income to the donee debtor).
\82\ Sec. 108(b).
---------------------------------------------------------------------------
The amount of discharge of indebtedness excluded from
income by an insolvent debtor not in a title 11 bankruptcy
case cannot exceed the amount by which the debtor is
insolvent. In the case of a discharge in bankruptcy or where
the debtor is insolvent, any reduction in basis may not
exceed the excess of the aggregate bases of properties held
by the taxpayer immediately after the discharge over the
aggregate of the liabilities of the taxpayer immediately
after the discharge.\83\
---------------------------------------------------------------------------
\83\ Sec. 1017.
---------------------------------------------------------------------------
For all taxpayers, the amount of discharge of indebtedness
generally is equal to the excess of the adjusted issue price
of the indebtedness being satisfied over the amount paid (or
deemed paid) to satisfy such indebtedness.\84\ This rule
generally applies to (1) the acquisition by the debtor of its
debt instrument in exchange for cash, (2) the issuance of a
debt instrument by the debtor in satisfaction of its
indebtedness, including a modification of indebtedness that
is treated as an exchange (a debt-for-debt exchange), (3) the
transfer by a debtor corporation of stock, or a debtor
partnership of a capital or profits interest in such
partnership, in satisfaction of its indebtedness (an equity-
for-debt exchange), and (4) the acquisition by a debtor
corporation of its indebtedness from a shareholder as a
contribution to capital.
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\84\ Treas. Reg. sec. 1.61-12(c)(2)(ii). Treas. Reg. sec.
1.1275-1(b) defines ``adjusted issue price.''
---------------------------------------------------------------------------
Debt-for-debt exchanges
If a debtor issues a debt instrument in satisfaction of its
indebtedness, the debtor is treated as having satisfied the
indebtedness with an amount of money equal to the issue price
of the newly issued debt instrument.\85\ The issue price of
such newly issued debt instrument generally is determined
under sections 1273 and 1274.\86\ Similarly, a ``significant
modification'' of a debt instrument, within the meaning of
Treas. Reg. sec. 1.1001-3, results in an exchange of the
original debt instrument for a modified instrument. In such
cases, where the issue price of the modified debt instrument
is less than the adjusted issue price of the original debt
instrument, the debtor will have income from the cancellation
of indebtedness.
---------------------------------------------------------------------------
\85\ Sec. 108(e)(1 0)(A).
\86\ Sec. 108(e)(10)(B).
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If any new debt instrument is issued (including as a result
of a significant modification to a debt instrument), such
debt instrument will have original issue discount equal to
the excess (if any) of such debt instrument's stated
redemption price at maturity over its issue price.\87\ In
general, an issuer of a debt instrument with original issue
discount may deduct for any taxable year, with respect to
such debt instrument, an amount of original issue discount
equal the aggregate daily portions of the original issue
discount for days during such taxable year.\88\
---------------------------------------------------------------------------
\87\ Sec. 1273.
\88\ Sec. 163(e).
---------------------------------------------------------------------------
Equity-for-debt exchanges
If a corporation transfers stock, or a partnership
transfers a capital or profits interest in such partnership,
to a creditor in satisfaction of its indebtedness, then such
corporation or partnership is treated as having satisfied its
indebtedness with an amount of money equal to the fair market
value of the stock or interest.\89\
---------------------------------------------------------------------------
\89\ Sec. 108(e)(8).
---------------------------------------------------------------------------
Related party acquisitions
Indebtedness directly or indirectly acquired by a person
who bears a relationship to the debtor described in section
267(b) or section 707(b) is treated as if it were acquired by
the debtor.\90\ Thus, where a debtor's indebtedness is
acquired for less than its adjusted issue price by a person
related to the debtor (within the meaning of section 267(b)
or 707(b)), the debtor recognizes income from the
cancellation of indebtedness. Regulations under section 108
provide that the indebtedness acquired by the related party
is
[[Page H1455]]
treated as new indebtedness issued by the debtor to the
related holder on the acquisition date (the deemed
issuance).\91\ The new indebtedness is deemed issued with an
issue price equal to the amount used under regulations to
compute the amount of cancellation of indebtedness income
realized by the debtor (i.e., either the holder's adjusted
basis or the fair market value of the indebtedness, as the
case may be).\92\ The indebtedness deemed issued pursuant to
the regulations has original issue discount to the extent its
stated redemption price at maturity exceeds its issue price.
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\90\ Sec. 108(e)(4).
\91\ Treas. Reg. sec. 1.108-2(g).
\92\ Id.
---------------------------------------------------------------------------
In the case of a deemed issuance under Treas. Reg. sec.
1.108-2(g), the related holder does not recognize any gain or
loss, and the related holder's adjusted basis in the
indebtedness remains the same as it was immediately before
the deemed issuance.\93\ The deemed issuance is treated as a
purchase of the indebtedness by the related holder for
purposes of section 1272(a)(7) (pertaining to reduction of
original issue discount where a subsequent holder pays
acquisition premium) and section 1276 (pertaining to
acquisitions of debt at a market discount).\94\
---------------------------------------------------------------------------
\93\ Treas. Reg. sec. 1.108-2(g)(2).
\94\ Id.
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Contribution of a debt instrument to capital of a
corporation
Where a debtor corporation acquires its indebtedness from a
shareholder as a contribution to capital, section 118 \95\
does not apply, but the corporation is treated as satisfying
such indebtedness with an amount of money equal to the
shareholder's adjusted basis in the indebtedness.
---------------------------------------------------------------------------
\95\ Section 118 provides, in general, that in the case of a
corporation, gross income does not include any contribution
to the capital of the taxpayer.
---------------------------------------------------------------------------
House Bill
No provision.
Senate Amendment
The provision permits a taxpayer to elect to defer income
from cancellation of indebtedness recognized by the taxpayer
as a result of a repurchase by (1) the taxpayer or (2) a
person who bears a relationship to the taxpayer described in
section 267(b) or section 707(b), of a ``debt instrument''
that was issued by the taxpayer. The provision applies only
to repurchases of debt that (1) occur after December 31,
2008, and prior to January 1, 2011, and (2) are repurchases
for cash. Thus, for example, the provision does not apply to
a debt-for-debt exchange or to any exchange of the taxpayer's
equity for a debt instrument of the taxpayer. For purposes of
the provision, a ``debt instrument'' is broadly defined to
include any bond, debenture, note, certificate or any other
instrument or contractual arrangement constituting
indebtedness.
Income from the discharge of indebtedness in connection
with the repurchase of a debt instrument in 2009 or 2010 must
be included in the gross income of the taxpayer ratably in
the eight taxable years beginning with (1) for repurchases in
2009, the second taxable year following the taxable year in
which the repurchase occurs or (2) for repurchases in 2010,
the taxable year following the taxable year in which the
repurchase occurs. The provision authorizes the Secretary of
the Treasury to prescribe such regulations as may be
necessary or appropriate for purposes of applying the
provision.
Effective date.--The provision applies to discharges in
taxable years ending after December 31, 2008.
Conference Agreement
The conference agreement follows the Senate amendment with
modifications. The provision permits a taxpayer to elect to
defer cancellation of indebtedness income arising from a
``reacquisition'' of ``an applicable debt instrument'' after
December 31, 2008, and before January 1, 2011. Income
deferred pursuant to the election must be included in the
gross income of the taxpayer ratably in the five taxable
years beginning with (1) for repurchases in 2009, the fifth
taxable year following the taxable year in which the
repurchase occurs or (2) for repurchases in 2010, the fourth
taxable year following the taxable year in which the
repurchase occurs.
An ``applicable debt instrument'' is any debt instrument
issued by (1) a C corporation or (2 any other person in
connection with the conduct of a trade or business by such
person. For purposes of the provision, a ``debt instrument''
is broadly defined to include any bond, debenture, note,
certificate or any other instrument or contractual
arrangement constituting indebtedness (within the meaning of
section 1275(a)(1)).
A ``reacquisition'' is any ``acquisition'' of an applicable
debt instrument by (1) the debtor that issued (or is
otherwise the obligor under) such debt instrument or (2) any
person related to the debtor within the meaning of section
108(e)(4). For purposes of the provision, an ``acquisition''
includes, without limitation, (1) an acquisition of a debt
instrument for cash, (2) the exchange of a debt instrument
for another debt instrument (including an exchange resulting
from a modification of a debt instrument), (3) the exchange
of corporate stock or a partnership interest for a debt
instrument, (4) the contribution of a debt instrument to the
capital of the issuer, and (5) the complete forgiveness of a
debt instrument by a holder of such instrument.
Special rules for debt-for-debt exchanges
If a taxpayer makes the election provided by the provision
for a debt-for-debt exchange in which the newly issued debt
instrument issued (or deemed issued, including by operation
of the rules in Treas. Reg. sec. 1.108-2(g)) in satisfaction
of an outstanding debt instrument of the debtor has original
issue discount, then any otherwise allowable deduction for
original issue discount with respect to such newly issued
debt instrument that (1) accrues before the first year of the
five-taxable-year period in which the related, deferred
discharge of indebtedness income is included in the gross
income of the taxpayer and (2) does not exceed such related,
deferred discharge of indebtedness income, is deferred and
allowed as a deduction ratably over the same five-taxable-
year period in which the deferred discharge of indebtedness
income is included in gross income.
This rule can apply also in certain cases when a debtor
reacquires its debt for cash. If the taxpayer issues a debt
instrument and the proceeds of such issuance are used
directly or indirectly to reacquire a debt instrument of the
taxpayer, the provision treats the newly issued debt
instrument as if it were issued in satisfaction of the
retired debt instrument. If the newly issued debt instrument
has original issue discount, the rule described above
applies. Thus, all or a portion of the interest deductions
with respect to original issue discount on the newly issued
debt instrument are deferred into the five-taxable-year
period in which the discharge of indebtedness income is
recognized. Where only a portion of the proceeds of a new
issuance are used by a taxpayer to satisfy outstanding debt,
then the deferral rule applies to the portion of the original
issue discount on the newly issued debt instrument that is
equal to the portion of the proceeds of such newly issued
instrument used to retire outstanding debt of the taxpayer.
Acceleration of deferred items
Cancellation of indebtedness income and any related
deduction for original issue discount that is deferred by an
electing taxpayer (and has not previously been taken into
account) generally is accelerated and taken into income in
the taxable year in which the taxpayer: (1) dies, (2)
liquidates or sells substantially all of its assets
(including in a title 11 or similar case), (3) ceases to do
business, or (4) or is in similar circumstances. In a case
under title 11 or a similar case, any deferred items are
taken into income as of the day before the petition is filed.
Deferred items are accelerated in a case under Title 11 where
the taxpayer liquidates, sells substantially all of its
assets, or ceases to do business, but not where a taxpayer
reorganizes and emerges from the Title 11 case. In the case
of a pass thru entity, this acceleration rule also applies to
the sale, exchange, or redemption of an interest in the
entity by a holder of such interest.
Special rule for partnerships
In the case of a partnership, any income deferred under the
provision is allocated to the partners in the partnership
immediately before the discharge of indebtedness in the
manner such amounts would have been included in the
distributive shares of such partners under section 704 if
such income were recognized at the time of the discharge. Any
decrease in a partner's share of liabilities as a result of
such discharge is not taken into account for purposes of
section 752 at the time of the discharge to the extent the
deemed distribution under section 752 would cause the partner
to recognize gain under section 731. Thus, the deemed
distribution under section 752 is deferred with respect to a
partner to the extent it exceeds such partner's basis.
Amounts so deferred are taken into account at the same time,
and to the extent remaining in the same amount, as income
deferred under the provision is recognized by the partner.
Coordination with section 108(a) and procedures for
election
Where a taxpayer makes the election provided by the
provision, the exclusions provided by section 108(a)(1)(A),
(B), (C), and (D) shall not apply to the income from the
discharge of indebtedness for the year in which the taxpayer
makes the election or any subsequent year. Thus, for example,
an insolvent taxpayer may elect under the provision to defer
income from the discharge of indebtedness rather than
excluding such income and reducing tax attributes by a
corresponding amount. The election is to be made on an
instrument by instrument basis; once made, the election is
irrevocable. A taxpayer makes an election with respect to a
debt instrument by including with its return for the taxable
year in which the reacquisition of the debt instrument occurs
a statement that (1) clearly identifies the debt instrument
and (2) includes the amount of deferred income to which the
provision applies and such other information as may be
prescribed by the Secretary. The Secretary is authorized to
require reporting of the election (and other information with
respect to the reacquisition) for years subsequent to the
year of the reacquisition.
Regulatory authority
The provision authorizes the Secretary of the Treasury to
prescribe such regulations as may be necessary or appropriate
for purposes of applying the provision, including rules
extending the acceleration provisions to other circumstances
where appropriate, rules requiring reporting of the election
and such other information as the Secretary may require on
returns of tax for subsequent taxable years, rules for the
application of the
[[Page H1456]]
provision to partnerships, S corporations, and other pass
thru entities, including for the allocation of deferred
deductions.
Effective date.--The provision is effective for discharges
in taxable years ending after December 31, 2008.
9. Modifications of rules for original issue discount on
certain high yield obligations (sec. 1232 of the
conference agreement and sec. 163 of the Code)
Present Law
In general, the issuer of a debt instrument with original
issue discount may deduct the portion of such original issue
discount equal to the aggregate daily portions of the
original issue discount for days during the taxable year.\96\
However, in the case of an applicable high-yield discount
obligation (an ``AHYDO'') issued by a corporate issuer: (1)
no deduction is allowed for the ``disqualified portion'' of
the original issue discount on such obligation, and (2) the
remainder of the original issue discount on any such
obligation is not allowable as a deduction until paid by the
issuer.\97\
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\96\ Sec. 163(e)(1). For purposes of section 163(e)(1), the
daily portion of the original issue discount for any day is
determined under section 1272(a) (without regard to paragraph
(7) thereof and without regard to section 1273(a)(3)).
\97\ Sec. 163(e)(5).
---------------------------------------------------------------------------
An AHYDO is any debt instrument if (1) the maturity date on
such instrument is more than five years from the date of
issue; (2) the yield to maturity on such instrument exceeds
the sum of (a) the applicable Federal rate in effect under
section 1274(d) for the calendar month in which the
obligation is issued and five percentage points, and (3) such
instrument has ``significant original issue discount.\98\ An
instrument is treated as having ``significant original issue
discount'' if the aggregate amount of interest that would be
includible in the gross income of the holder with respect to
such instrument for periods before the close of any accrual
period (as defined in section 1272(a)(5)) ending after the
date five years after the date of issue, exceeds the sum of
(1) the aggregate amount of interest to be paid under the
instrument before the close of such accrual period, and (2)
the product of the issue price of such instrument (as defined
in sections 1273(b) and 1274(a)) and its yield to
maturity.\99\
---------------------------------------------------------------------------
\98\ Sec. 163(i)(1).
\99\ Sec. 163(i)(2).
---------------------------------------------------------------------------
The disqualified portion of the original issue discount on
an AHYDO is the lesser of (1) the amount of original issue
discount with respect to such obligation or (2) the portion
of the ``total return'' on such obligation which bears the
same ratio to such total return as the ``disqualified yield''
(i.e., the excess of the yield to maturity on the obligation
over the applicable Federal rate plus six percentage points)
on such obligation bears to the yield to maturity on such
obligation.\100\ The term ``total return'' means the amount
which would have been the original issue discount of the
obligation if interest described in section 1273(a)(2) were
included in the 101 stated redemption to maturity.\101\ A
corporate holder treats the disqualified portion of original
issue discount as a stock distribution for purposes of the
dividend received deduction.\102\
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\100\ Sec. 163(e)(5)(C).
\101\ Sec. 163(e)(5)(C)(ii).
\102\ Sec. 163(e)(5)(B).
---------------------------------------------------------------------------
House Bill
No provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement adds a provision that suspends the
rules in section 163(e)(5) for certain obligations issued in
a debt-for-debt exchange, including an exchange resulting
from a significant modification of a debt instrument, after
August 31, 2008, and before January 1, 2010.
In general, the suspension does not apply to any newly
issued debt instrument (including any debt instrument issued
as a result of a significant modification of a debt
instrument) that is issued for an AHYDO. However, any newly
issued debt instrument (including any debt instrument issued
as a result of a significant modification of a debt
instrument) for which the AHYDO rules are suspended under the
provision is not treated as an AHYDO for purposes of a
subsequent application of the suspension rule. Thus, for
example, if a new debt instrument that would be an AHYDO
under present law is issued in exchange for a debt instrument
that is not an AHYDO, and the provision suspends application
of section 163(e)(5), another new debt instrument, issued
during the suspension period in exchange for the instrument
with respect to which the rule in section 163(e)(5) was
suspended, would be eligible for the relief provided by the
provision despite the fact that it is issued for an
instrument that is an AHYDO under present law.
In addition, the suspension does not apply to any newly
issued debt instrument (including any debt instrument issued
as a result of a significant modification of a debt
instrument) that is (1) described in section 871(h)(4)
(without regard to subparagraph (D) thereof) (i.e., certain
contingent debt) or (2) issued to a person related to the
issuer (within the meaning of section 108(e)(4)).
The provision provides authority to the Secretary to apply
the suspension rule to periods after December 31, 2009, where
the Secretary determines that such application is appropriate
in light of distressed conditions in the debt capital
markets. In addition, the provision grants authority to the
Secretary to use a rate that is higher than the applicable
Federal rate for purposes of applying section 163(e)(5) for
obligations issued after December 31, 2009, in taxable years
ending after such date if the Secretary determines that such
higher rate is appropriate in light of distressed conditions
in the debt capital markets.
Effective date.--The temporary suspension of section
163(e)(5) applies to obligations issued after August 31,
2008, in taxable years ending after such date. The additional
authority granted to the Secretary to use a rate higher than
the applicable Federal rate for purposes of applying section
163(e)(5) applies to obligations issued after December 31,
2009, in taxable years ending after such date.
10. Special rules applicable to qualified small business
stock for 2009 and 2010 (sec. 1241 of the Senate
amendment, sec. 1241 of the conference agreement, and
sec. 1202 of the Code)
Present Law
Under present law, individuals may exclude 50 percent (60
percent for certain empowerment zone businesses) of the gain
from the sale of certain small business stock acquired at
original issue and held for at least five years.\103\ The
portion of the gain includible in taxable income is taxed at
a maximum rate of 28 percent under the regular tax.\104\ A
percentage of the excluded gain is an alternative minimum tax
preference,\105\ the portion of the gain includible in
alternative minimum taxable income is taxed at a maximum rate
of 28 percent under the alternative minimum tax.
---------------------------------------------------------------------------
\103\ Sec. 1202.
\104\ Sec. 1(h).
\105\ Sec. 57(a)(7). In the case of qualified small business
stock, the percentage of gain excluded from gross income
which is an alternative minimum tax preference is (i) seven
percent in the case of stock disposed of in a taxable year
beginning before 2011; (ii) 42 percent in the case of stock
acquired before January 1, 2001, and disposed of in a taxable
year beginning after 2010; and (iii) 28 percent in the case
of stock acquired after December 31, 2000, and disposed of in
a taxable year beginning after 2010.
---------------------------------------------------------------------------
Thus, under present law, gain from the sale of qualified
small business stock is taxed at effective rates of 14
percent under the regular tax \106\ and (i) 14.98 percent
under the alternative minimum tax for dispositions before
January 1, 2011; (ii) 19.98 percent under the alternative
minimum tax for dispositions after December 31, 2010, in the
case of stock acquired before January 1, 2001; and (iii)
17.92 percent under the alternative minimum tax for
dispositions after December 31, 2010, in the case of stock
acquired after December 31, 2006.\107\
---------------------------------------------------------------------------
\106\ The 50 percent of gain included in taxable income is
taxed at a maximum rate of 28 percent.
\107\ The amount of gain included in alternative minimum tax
is taxed at a maximum rate of 28 percent. The amount so
included is the sum of (i) 50 percent (the percentage
included in taxable income) of the total gain and (ii) the
applicable preference percentage of the one-half gain that is
excluded from taxable income.
---------------------------------------------------------------------------
The amount of gain eligible for the exclusion by an
individual with respect to any corporation is the greater of
(1) ten times the taxpayer's basis in the stock or (2) $10
million. In order to qualify as a small business, when the
stock is issued, the gross assets of the corporation may not
exceed $50 million. The corporation also must meet certain
active trade or business requirements.
House Bill
No provision.
Senate Amendment
Under the Senate amendment, the percentage exclusion for
qualified small business stock sold by an individual is
increased from 50 percent (60 percent for certain empowerment
zone businesses) to 75 percent.
As a result of the increased exclusion, gain from the sale
of qualified small business stock to which the provision
applies is taxed at effective rates of seven percent under
the regular tax \108\ and 12.88 percent under the alternative
minimum tax.\109\
---------------------------------------------------------------------------
\108\ The 25 percent of gain included in taxable income is
taxed at a maximum rate of 28 percent.
\109\ The 46 percent of gain included in alternative minimum
tax is taxed at a maximum rate of 28 percent. Forty-six
percent is the sum of 25 percent (the percentage of total
gain included in taxable income) plus 21 percent (the
percentage of total gain which is an alternative minimum tax
preference).
---------------------------------------------------------------------------
Effective date.--The provision is effective for stock
issued after the date of enactment and before January 1,
2011.
Conference Agreement
The conference agreement follows the Senate amendment.
11. Temporary reduction in recognition period for S
corporation built-in gains tax (sec. 1261 of the Senate
amendment, sec. 1251 of the conference agreement, and
sec. 1374 of the Code)
Present Law
A ``small business corporation'' (as defined in section
1361(b)) may elect to be treated as an S corporation. Unlike
C corporations, S corporations generally pay no corporate-
level tax. Instead, items of income and loss of an S
corporation pass though to its shareholders. Each shareholder
takes into account separately its share of these items on its
individual income tax return.\110\
---------------------------------------------------------------------------
\110\ Sec. 1366.
---------------------------------------------------------------------------
A corporate level tax, at the highest marginal rate
applicable to corporations (currently 35 percent) is imposed
on an S corporation's gain that arose prior to the conversion
of the C corporation to an S corporation and is recognized by
the S corporation
[[Page H1457]]
during the recognition period, i.e., the first 10 taxable
years that the S election is in effect.\111\
---------------------------------------------------------------------------
\111\ Sec. 1374.
---------------------------------------------------------------------------
Gains recognized in the recognition period are not built-in
gains to the extent they are shown to have arisen while the S
election was in effect or are offset by recognized built-in
losses. The built-in gains tax also applies to gains with
respect to net recognized built-in gain attributable to
property received by an S corporation from a C corporation in
a carryover basis transaction.\112\ The amount of the built-
in gains tax is treated as a loss taken into account by the
shareholders in computing their individual income tax.\113\
---------------------------------------------------------------------------
\112\ Sec. 1374(d)(8). With respect to such assets, the
recognition period runs from the day on which such assets
were acquired (in lieu of the beginning of the first taxable
year for which the corporation was an S corporation). Sec.
1374(d)(8)(B).
\113\ Sec. 1366(f)(2).
---------------------------------------------------------------------------
House Bill
No provision.
Senate Amendment
The Senate amendment provides that, for any taxable year
beginning in 2009 and 2010, no tax is imposed on an S
corporation under section 1374 if the seventh taxable year in
the corporation's recognition period preceded such taxable
year. Thus, with respect to gain that arose prior to the
conversion of a C corporation to an S corporation, no tax
will be imposed under section 1374 after the seventh taxable
year the S corporation election is in effect. In the case of
built-in gain attributable to an asset received by an S
corporation from a C corporation in a carryover basis
transaction, no tax will be imposed under section 1374 if
such gain is recognized after the date that is seven years
following the date on which such asset was acquired.\114\
---------------------------------------------------------------------------
\114\ Shareholders will continue to take into account all
items of gain and loss under section 1366.
---------------------------------------------------------------------------
Effective date.--The provision applies to taxable years
beginning after December 31, 2008.
Conference Agreement
The conference agreement follows the Senate amendment.
12. Broadband internet access tax credit (sec. 1271 of the
Senate amendment)
Present Law
A taxpayer is allowed to recover, through annual
depreciation deductions, the cost of certain property used in
a trade or business or for the production of income. The
amount of the depreciation deduction allowed with respect to
tangible property for a taxable year is determined under the
modified accelerated cost recovery system (``MACRS'').\115\
Under MACRS, different types of property generally are
assigned applicable recovery periods and depreciation
methods. The recovery periods applicable to most tangible
personal property (generally tangible property other than
residential rental property and nonresidential real property)
range from three to 25 years. The depreciation methods
generally applicable to tangible personal property are the
200-percent and 150-percent declining balance methods,
switching to the straight-line method for the taxable year in
which the depreciation deduction would be maximized.
---------------------------------------------------------------------------
\115\ Sec. 168.
---------------------------------------------------------------------------
No credit is specifically designed under present law to
encourage the development of qualified broadband
expenditures.
House Bill
No provision.
Senate Amendment
The amendment provides an investment tax credit for
``qualified broadband expenditures.'' Qualified broadband
expenditures comprise both ``current-generation'' and ``next-
generation'' broadband. The provision establishes a 10
percent credit for investment in current-generation broadband
in rural and underserved areas. The provision establishes a
20 percent credit for investment in current-generation
broadband in unserved areas. The provision establishes a 20
percent credit for investment in next-generation broadband in
rural, underserved, unserved, and residential areas. The
basis of qualified property must be reduced by the amount of
credit received. To qualify for the credit, the qualified
broadband equipment must be placed in service after December
31, 2008, and before January 1, 2011.
``Current-generation'' broadband services are defined as
the transmission of signals at a rate of at least 5 million
bits per second to the subscriber and at a rate of at least 1
million bits per second from the subscriber or wireless
technology transmission of signals at a rate of at least 3
million bits per second to the subscriber and at a rate of at
least 768 kilobits per second from the subscriber. ``Next-
generation'' broadband services are defined as the
transmission of signals at a rate of at least 100 million
bits per second to the subscriber and at a rate of at least
20 million bits per second from the subscriber.
Qualified broadband expenditures means the direct or
indirect costs properly taken into account for the taxable
year for the purchase or installation of qualified equipment
(including upgrades) and the connection of the equipment to a
qualified subscriber.
Qualified broadband expenditures include only the portion
of the purchase price paid by the lessor, in the case of
leased equipment, that is attributable to otherwise qualified
broadband expenditures by the lessee. In the case of property
that is originally placed in service by a person and that is
sold to the taxpayer and leased back to such person by the
taxpayer within three months after the date that the property
was originally placed in service, the property is treated as
originally placed in service by the taxpayer not earlier than
the date that the property is used under the leaseback.
A qualified subscriber, with respect to current-generation
broadband services, means any nonresidential subscriber
maintaining a permanent place of business in a rural,
underserved, or unserved area, or any residential subscriber
residing in a rural, underserved, or unserved area that is
not a saturated market. A qualified subscriber, with respect
to next generation broadband services, means any
nonresidential subscriber maintaining a permanent place of
business in a rural, underserved, or unserved area, or any
residential subscriber.
For this purpose, a rural area is a low-income community
designated under section 45D which is defined as a population
census tract located in a with either (1) a poverty rate of
at least 20 percent or (2) median family income which does
not exceed 80 percent of the greater of metropolitan area
median family income or statewide median family income (for a
non-metropolitan census tract, does not exceed 80 percent of
statewide median family income).
An underserved area means a census tract located in an
empowerment zone or enterprise community designated under
section 1391, or the District of Columbia Enterprise Zone
established under section 1400, or a renewal community
designated under section 1400E, or a low-income community
designated under section 45D.
An unserved area is an area without current-generation
broadband service.
A saturated market, for this purpose, means any census
tract in which, as of the date of enactment, current
generation broadband services have been provided by a single
provider to 85 percent or more of the total potential
residential subscribers. The services must be usable at least
a majority of the time during periods of maximum demand, and
usable in a manner substantially the same as services
provided through equipment not eligible for the deduction
under this provision.
If current- or next-generation broadband services can be
provided through qualified equipment to both qualified
subscribers and to other subscribers, the provision provides
that the expenditures with respect to the equipment are
allocated among subscribers to determine the amount of
qualified broad broadband expenditures that may be deducted
under the provision.
Qualified equipment means equipment that provides current-
or next-generation broadband services at least a majority of
the time during periods of maximum demand to each subscriber,
and in a manner substantially the same as such services are
provided by the provider to subscribers through equipment
with respect to which no deduction is allowed under the
provision. Limitations are imposed under the provision on
equipment depending on where it extends, and on certain
packet switching equipment, and on certain multiplexing and
demultiplexing equipment.
Expenditures generally are not taken into account for
purposes of the credit under the provision with respect to
property used predominantly outside the United States, used
predominantly to furnish lodging, used by a tax-exempt
organization (other than in a business whose income is
subject to unrelated business income tax), or used by the
United States or a political subdivision or by a possession,
agency or instrumentality thereof or by a foreign person or
entity. The basis of property is reduced by the cost of the
property that is taken into account as a deduction under the
provision. Recapture rules are provided. The credit is part
of the general business credit.
Effective date.--The provision is effective for property
placed in service after December 31, 2008.
Conference Agreement
The conference agreement does not include the Senate
amendment provision.
C. Fiscal Relief for State and Local Governments
1. De minimis safe harbor exception for tax-exempt interest
expense of financial institutions and modification of
small issuer exception to tax-exempt interest expense
allocation rules for financial institutions (secs. 1501
and 1502 of the House bill, secs. 1501 and 1502 of the
Senate amendment, secs. 1501 and 1502 of the conference
agreement, and sec. 265 of the Code)
Present Law
Present law disallows a deduction for interest on
indebtedness incurred or continued to purchase or carry
obligations the interest on which is exempt from tax. \116\
In general, an interest deduction is disallowed only if the
taxpayer has a purpose of using borrowed funds to purchase or
carry tax-exempt obligations; a determination of the
taxpayer's purpose in borrowing funds is made based on all of
the facts and circumstances. \117\
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\116\ Sec. 265(a).
\117\ See Rev. Proc. 72-18, 1972-1 C.B. 740.
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Two-percent rule for individuals and certain nonfinancial
corporations
In the absence of direct evidence linking an individual
taxpayer's indebtedness with the purchase or carrying of tax-
exempt obligations, the Internal Revenue Service takes
[[Page H1458]]
the position that it ordinarily will not infer that a
taxpayer's purpose in borrowing money was to purchase or
carry tax-exempt obligations if the taxpayer's investment in
tax-exempt obligations is ``insubstantial.'' \118\ An
individual's holdings of tax-exempt obligations are presumed
to be insubstantial if during the taxable year the average
adjusted basis of the individual's tax-exempt obligations is
two percent or less of the average adjusted basis of the
individual's portfolio investments and assets held by the
individual in the active conduct of a trade or business.
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\118\ Id.
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Similarly, in the case of a corporation that is not a
financial institution or a dealer in tax-exempt obligations,
where there is no direct evidence of a purpose to purchase or
carry tax-exempt obligations, the corporation's holdings of
tax-exempt obligations are presumed to be insubstantial if
the average adjusted basis of the corporation's tax-exempt
obligations is two percent or less of the average adjusted
basis of all assets held by the corporation in the active
conduct of its trade or business.
Financial institutions
In the case of a financial institution, the Code generally
disallows that portion of the taxpayer's interest expense
that is allocable to tax-exempt interest. \119\ The amount of
interest that is disallowed is an amount which bears the same
ratio to such interest expense as the taxpayer's average
adjusted bases of tax-exempt obligations acquired after
August 7, 1986, bears to the average adjusted bases for all
assets of the taxpayer.
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\119\ Sec. 265(b)(1). A ``financial institution'' is any
person that (1) accepts deposits from the public in the
ordinary course of such person's trade or business and is
subject to Federal or State supervision as a financial
institution or (2) is a corporation described in section
585(a)(2). Sec. 265(b)(5).
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Exception for certain obligations of qualified small
issuers
The general rule in section 265(b), denying financial
institutions' interest expense deductions allocable to tax-
exempt obligations, does not apply to ``qualified tax-exempt
obligations.'' \120\ Instead, as discussed in the next
section, only *percent of the interest expense allocable to
``qualified tax-exempt obligations'' is disallowed. \121\ A
``qualified tax-exempt obligation'' is a tax-exempt
obligation that (1) is issued after August 7, 1986, by a
qualified small issuer, (2) is not a private activity bond,
and (3) is designated by the issuer as qualifying for the
exception from the general rule of section 265(b).
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\120\ Sec. 265(b)(3).
\121\ Secs. 265(b)(3)(A), 291(a)(3) and 291(e)(1).
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A ``qualified small issuer'' is an issuer that reasonably
anticipates that the amount of tax-exempt obligations that it
will issue during the calendar year will be $10 million or
less. \122\ The Code specifies the circumstances under which
an issuer and all subordinate entities are aggregated. \123\
For purposes of the $10 million limitation, an issuer and all
entities that issue obligations on behalf of such issuer are
treated as one issuer. All obligations issued by a
subordinate entity are treated as being issued by the entity
to which it is subordinate. An entity formed (or availed of)
to avoid the $10 million limitation and all entities
benefiting from the device are treated as one issuer.
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\122\ Sec. 265(b)(3)(C).
\123\ Sec. 265(b)(3)(E).
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Composite issues (i.e., combined issues of bonds for
different entities) qualify for the ``qualified tax-exempt
obligation'' exception only if the requirements of the
exception are met with respect to (1) the composite issue as
a whole (determined by treating the composite issue as a
single issue) and (2) each separate lot of obligations that
is part of the issue (determined by treating each separate
lot of obligations as a separate issue). \124\ Thus a
composite issue may qualify for the exception only if the
composite issue itself does not exceed $10 million, and if
each issuer benefitting from the composite issue reasonably
anticipates that it will not issue more than $10 million of
tax-exempt obligations during the calendar year, including
through the composite arrangement.
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\124\ Sec. 265(b)(3)(F).
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Treatment of financial institution preference items
Section 291(a)(3) reduces by 20 percent the amount
allowable as a deduction with respect to any financial
institution preference item. Financial institution preference
items include interest on debt to tax-exempt obligations
acquired after December 31, 1982, and before acquired on
August 7, 1986. \125\ Section 265(b)(3) treats qualified tax-
exempt obligations as if they were acquired on August 7,
1986. As a result, the amount allowable as a deduction by a
financial institution with respect to interest incurred to
carry a qualified tax-exempt obligation is reduced by 20
percent.
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\125\ Sec. 291(e)(1).
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House Bill
Two-percent safe harbor for financial institutions
The provision provides that tax-exempt obligations issued
during 2009 or 2010 and held by a financial institution, in
an amount not to exceed two percent of the adjusted basis of
the financial institution's assets, are not taken into
account for the purpose of determining the portion of the
financial institution's interest expense subject to the pro
rata interest disallowance rule of section 265(b). For
purposes of this rule, a refunding bond (whether a current or
advance refunding) is treated as issued on the date of the
issuance of the refunded bond (or in the case of a series of
refundings, the original bond).
The provision also amends section 291(e) to provide that
tax-exempt obligations issued during 2009 and 2010, and not
taken into account for purposes of the calculation of a
financial institution's interest expense subject to the pro
rata interest disallowance rule, are treated as having been
acquired on August 7, 1986. As a result, such obligations are
financial institution preference items, and the amount
allowable as a deduction by a financial institution with
respect to interest incurred to carry such obligations is
reduced by 20 percent.
Modifications to qualified small issuer exception
With respect to tax-exempt obligations issued during 2009
and 2010, the provision increases from $10 million to $30
million the annual limit for qualified small issuers.
In addition, in the case of ``qualified financing issue''
issued in 2009 or 2010, the provision applies the $30 million
annual volume limitation at the borrower level (rather than
at the level of the pooled financing issuer). Thus, for the
purpose of applying the requirements of the section 265(b)(3)
qualified small issuer exception, the portion of the proceeds
of a qualified financing issue that are loaned to a
``qualified borrower'' that participates in the issue are
treated as a separate issue with respect to which the
qualified borrower is deemed to be the issuer.
A ``qualified financing issue'' is any composite, pooled or
other conduit financing issue the proceeds of which are used
directly or indirectly to make or finance loans to one or
more ultimate borrowers all of whom are qualified borrowers.
A ``qualified borrower'' means (1) a State or political
subdivision of a State or (2) an organization described in
section 501(c)(3) and exempt from tax under section 501(a).
Thus, for example, a $100 million pooled financing issue that
was issued in 2009 could qualify for the section 265(b)(3)
exception if the proceeds of such issue were used to make
four equal loans of $25 million to four qualified borrowers.
However, if (1) more than $30 million were loaned to any
qualified borrower, (2) any borrower were not a qualified
borrower, or (3) any borrower would, if it were the issuer of
a separate issue in an amount equal to the amount loaned to
such borrower, fail to meet any of the other requirements of
section 265(b)(3), the entire $100 million pooled financing
issue would fail to qualify for the exception.
For purposes of determining whether an issuer meets the
requirements of the small issuer exception, qualified
501(c)(3) bonds issued in 2009 or 2010 are treated as if they
were issued by the 501(c)(3) organization for whose benefit
they were issued (and not by the actual issuer of such
bonds). In addition, in the case of an organization described
in section 501(c)(3) and exempt from taxation under section
501(a), requirements for ``qualified financing issues'' shall
be applied as if the section 501(c)(3) organization were the
issuer. Thus, in any event, an organization described in
section 501(c)(3) and exempt from taxation under section
501(a) shall be limited to the $30 million per issuer cap for
qualified tax exempt obligations described in section
265(b)(3).
Effective Date.--The provisions are effective for
obligations issued after December 31, 2008.
Senate Amendment
The Senate amendment is the same as the House bill.
Conference Agreement
The conference agreement follows the House bill and the
Senate amendment.
2. Temporary modification of alternative minimum tax
limitations on tax-exempt bonds (sec. 1503 of the House
bill, sec. 1503 of the Senate amendment, sec. 1503 of the
conference agreement, and secs. 56 and 57 of the Code)
Present Law
Present law imposes an alternative minimum tax (``AMT'') on
individuals and corporations. AMT is the amount by which the
tentative minimum tax exceeds the regular income tax. The
tentative minimum tax is computed based upon a taxpayer's
alternative minimum taxable income (``AMTI''). AMTI is the
taxpayer's taxable income modified to take into account
certain preferences and adjustments. One of the preference
items is tax-exempt interest on certain tax-exempt bonds
issued for private activities (sec. 57(a)(5)). Also, in the
case of a corporation, an adjustment based on current
earnings is determined, in part, by taking into account 75
percent of items, including tax-exempt interest, that are
excluded from taxable income but included in the
corporation's earnings and profits (sec. 56(g)(4)(B)).
House Bill
The House bill provides that tax-exempt interest on private
activity bonds issued in 2009 and 2010 is not an item of tax
preference for purposes of the alternative minimum tax and
interest on tax exempt bonds issued in 2009 and 2010 is not
included in the corporate adjustment based on current
earnings. For these purposes, a refunding bond is treated as
issued on the date of the issuance of the refunded bond (or
in the case of a series of refundings, the original bond).
Effective date.--The provision applies to interest on bonds
issued after December 31, 2008.
Senate Amendment
The Senate amendment is the same as the House bill.
[[Page H1459]]
Conference Agreement
The conference agreement provides that tax-exempt interest
on private activity bonds issued in 2009 and 2010 is not an
item of tax preference for purposes of the alternative
minimum tax and interest on tax exempt bonds issued in 2009
and 2010 is not included in the corporate adjustment based on
current earnings. For these purposes, a refunding bond is
treated as issued on the date of the issuance of the refunded
bond (or in the case of a series of refundings, the original
bond).
The conference agreement also provides that tax-exempt
interest on private activity bonds issued in 2009 and 2010 to
currently refund a private activity bond issued after
December 31, 2003, and before January 1, 2009, is not an item
of tax preference for purposes of the alternative minimum
tax. Also tax-exempt interest on bonds issued in 2009 and
2010 to currently refund a bond issued after December 31,
2003, and before January 1, 2009, is not included in the
corporate adjustment based on current earnings.
Effective date.--The provision applies to interest on bonds
issued after December 31, 2008.
3. Temporary expansion of availability of industrial
development bonds to facilities creating intangible
property and other modifications (sec. 1301 of the Senate
amendment, sec. 1301 of the conference agreement, and
sec. 144(a) of the Code)
Present Law
Qualified small issue bonds (commonly referred to as
``industrial development bonds'' or ``small issue IDBs'') are
tax-exempt bonds issued by State and local governments to
finance private business manufacturing facilities (including
certain directly related and ancillary facilities) or the
acquisition of land and equipment by certain farmers. In both
instances, these bonds are subject to limits on the amount of
financing that may be provided, both for a single borrowing
and in the aggregate. In general, no more than $1 million of
small-issue bond financing may be outstanding at any time for
property of a business (including related parties) located in
the same municipality or county. Generally, this $1 million
limit may be increased to $10 million if, in addition to
outstanding bonds, all other capital expenditures of the
business (including related parties) in the same municipality
or county are counted toward the limit over a six-year period
that begins three years before the issue date of the bonds
and ends three years after such date. Outstanding aggregate
borrowing is limited to $40 million per borrower (including
related parties) regardless of where the property is located.
The Code permits up to $10 million of capital expenditures
to be disregarded, in effect increasing from $10 million to
$20 million the maximum allowable amount of total capital
expenditures by an eligible business in the same municipality
or county. However, no more than $10 million of bond
financing may be outstanding at any time for property of an
eligible business (including related parties) located in the
same municipality or county. Other limits (e.g., the $40
million per borrower limit) also continue to apply.
A manufacturing facility is any facility which is used in
the manufacturing or production of tangible personal property
(including the processing resulting in a change in the
condition of such property). Manufacturing facilities include
facilities that are directly related and ancillary to a
manufacturing facility (as described in the previous
sentence) if (1) such facilities are located on the same site
as the manufacturing facility and (2 not more than 25 percent
of the net proceeds of the issue are used to provide such
facilities.\126\
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\126\ The 25 percent restriction was enacted by the Technical
and Miscellaneous Tax Act of 1988 because of concern over the
scope of the definition of manufacturing facility. See H.R.
Rpt. No. 100-795 (1988). The amendment was intended to
clarify that while the manufacturing facility definition does
not preclude the financing of ancillary activities, the 25
percent restriction was intended to limit the use of bond
proceeds to finance facilities other than for ``core
manufacturing.'' The conference agreement followed the House
bill, which the conference report described as follows: ``The
House bill clarifies that up to 25 percent of the proceeds of
a qualified small issue may be used to finance ancillary
activities which are carried out at the manufacturing site.
All such ancillary activities must be subordinate and
integral to the manufacturing process.''
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House Bill
No provision.
Senate Amendment
In general
For bonds issued after the date of enactment and before
January 1, 2011, the provision expands the definition of
manufacturing facilities to mean any facility that is used in
the manufacturing, creation, or production of tangible
property or intangible property (within the meaning of
section 197(d)(1)(C)(iii)). For this purpose, intangible
property means any patent, copyright, formula, process,
design, knowhow, format, or other similar item. It is
intended to include among other items, the creation of
computer software, and intellectual property associated bio-
tech and pharmaceuticals.
In lieu of the directly related and ancillary test of
present law, the provision provides a special rule for bonds
issued after the date of enactment and before January 1,
2011. For these bonds, the provision provides that facilities
that are functionally related and subordinate to the
manufacturing facility are treated as a manufacturing
facility and the 25 percent of net proceeds restriction does
not apply to such facilities.\127\ Functionally related and
subordinate facilities must be located on the same site as
the manufacturing facility.
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\127\ The provision is based in part on a similar rule
applicable to exempt facility bonds. Treas. Reg. sec. 1.103-
8(a)(3) provides: ``(3) Functionally related and subordinate.
An exempt facility includes any land, building, or other
property functionally related and subordinate to such
facility. Property is not functionally related and
subordinate to a facility if it is not of a character and
size commensurate with the character and size of such
facility.''
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Effective date
The provision is effective for bonds issued after the date
of enactment and before January 1, 2011.
Conference Agreement
The conference agreement follows the Senate amendment.
4. Qualified school construction bonds (sec. 1511 of the
House bill, sec. 1521 of the Senate amendment, sec. 1521
of the conference agreement, and new sec. 54F of the
Code)
Present Law
Tax-exempt bonds
Interest on State and local governmental bonds generally is
excluded from gross income for Federal income tax purposes if
the proceeds of the bonds are used to finance direct
activities of these governmental units or if the bonds are
repaid with revenues of the governmental units. These can
include tax-exempt bonds which finance public schools.\128\
An issuer must file with the Internal Revenue Service certain
information about the bonds issued in order for that bond
issue to be tax-exempt.\129\ Generally, this information
return is required to be filed no later than the 15th day of
the second month after the close of the calendar quarter in
which the bonds were issued.
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\128\ Sec. 103.
\129\ Sec. 149(e).
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The tax exemption for State and local bonds does not apply
to any arbitrage bond.\130\ An arbitrage bond is defined as
any bond that is part of an issue if any proceeds of the
issue are reasonably expected to be used (or intentionally
are used) to acquire higher-yielding investments or to
replace funds that are used to acquire higher yielding
investments.\131\ In general, arbitrage profits may be earned
only during specified periods (e.g., defined ``temporary
periods'') before funds are needed for the purpose of the
borrowing or on specified types of investments (e.g.,
``reasonably required reserve or replacement funds'').
Subject to limited exceptions, investment profits that are
earned during these periods or on such investments must be
rebated to the Federal Government.
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\130\ Sec. 103(a) and (b)(2).
\131\ Sec. 148.
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Qualified zone academy bonds
As an alternative to traditional tax-exempt bonds, State nd
local governments were given the authority to issue
``qualified zone academy bonds.'' \132\ A total of $400
million of qualified zone academy bonds is authorized to be
issued annually in calendar years 1998 through 2009. The $400
million aggregate bond cap is allocated each year to the
States according to their respective populations of
individuals below the poverty line. Each State, in turn,
allocates the credit authority to qualified zone academies
within such State.
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\132\ Sec. 1397E.
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A taxpayer holding a qualified zone academy bond on the
credit allowance date is entitled to a credit. The credit is
includible in gross income (as if it were a taxable interest
payment on the bond), and may be claimed against regular
income tax and alternative minimum tax liability.
The Treasury Department sets the credit rate at a rate
estimated to allow issuance of qualified zone academy bonds
without discount and without interest cost to the
issuer.\133\ The Secretary determines credit rates for tax
credit bonds based on general assumptions about credit
quality of the class of potential eligible issuers and such
other factors as the Secretary deems appropriate. The
Secretary may determine credit rates based on general credit
market yield indexes and credit ratings. The maximum term of
the bond is determined by the Treasury Department, so that
the present value of the obligation to repay the principal on
the bond is 50 percent of the face value of the bond.
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\133\ Given the differences in credit quality and other
characteristics of individual issuers, the Secretary cannot
set credit rates in a manner that will allow each issuer to
issue tax credit bonds at par.
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``Qualified zone academy bonds'' are defined as any bond
issued by a State or local government, provided that (1) at
least 95 percent of the proceeds are used for the purpose of
renovating, providing equipment to, developing course
materials for use at, or training teachers and other school
personnel in a ``qualified zone academy'' and (2) private
entities have promised to contribute to the qualified zone
academy certain equipment, technical assistance or training,
employee services, or other property or services with a value
equal to at least 10 percent of the bond proceeds.
A school is a ``qualified zone academy'' if (1) the school
is a public school that provides education and training below
the college level, (2) the school operates a special academic
program in cooperation with businesses to enhance the
academic curriculum and increase graduation and employment
[[Continued on page H1460]]