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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

House Discussion and Vote

Senate Discussion and Vote


[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.
---------------------------------------------------------------------------
     \1\ Earned income is defined as (1) wages, salaries, tips, 
     and other employee compensation, but only if such amounts are 
     includible in gross income, plus (2) the amount of the 
     individual's net self-employment earnings.
---------------------------------------------------------------------------
       The EITC is a refundable credit, meaning that if the amount 
     of the credit exceeds the taxpayer's Federal income tax 
     liability, the excess is payable to the taxpayer as a direct 
     transfer payment. Under an advance payment system, eligible 
     taxpayers may elect to receive the credit in their paychecks, 
     rather than waiting to claim a refund on their tax returns 
     filed by April 15 of the following year.
     Child credit
       An individual may claim a tax credit for each qualifying 
     child under the age of 17. The amount of the credit per child 
     is $1,000 through 2010 and $500 thereafter. A child who is 
     not a citizen, national, or resident of the United States 
     cannot be a qualifying child.
       The credit is phased out for individuals with income over 
     certain threshold amounts. Specifically, the otherwise 
     allowable child tax credit is reduced by $50 for each $1,000 
     (or fraction thereof) of modified adjusted gross income over 
     $75,000 for single individuals or heads of households, 
     $110,000 for married individuals filing joint returns, and 
     $55,000 for married individuals filing separate returns. For 
     purposes of this limitation, modified adjusted gross income 
     includes certain otherwise excludable income earned by U.S. 
     citizens or residents living abroad or in certain U.S. 
     territories.

[[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\
---------------------------------------------------------------------------
     \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\
---------------------------------------------------------------------------
     \3\ Possessions with mirror code tax systems are the United 
     States Virgin Islands, Guam, and the Commonwealth of the 
     Northern Mariana Islands.
---------------------------------------------------------------------------
       The U.S. Treasury will make payments to each mirror code 
     possession in an amount equal to the aggregate amount of the 
     credits allowable by reason of the provision to that 
     possession's residents against its income tax. This amount 
     will be determined by the Treasury Secretary based on 
     information provided by the government of the respective 
     possession. For purposes of these payments, a possession is a 
     mirror code possession if the income tax liability of 
     residents of the possession under that possession's income 
     tax system is determined by reference to the U.S. income tax 
     laws as if the possession were the United States.
       Non-mirror code possessions \4\
---------------------------------------------------------------------------
     \4\ Possessions that do not have mirror code tax systems are 
     Puerto Rico and American Samoa.
---------------------------------------------------------------------------
       To each possession that does not have a mirror code tax 
     system, the U.S. Treasury will make two payments (for 2009 
     and 2010, respectively) in an amount estimated by the 
     Secretary as being equal to the aggregate credits that would 
     have been allowed to residents of that possession if a mirror 
     code tax system had been in effect in that possession. 
     Accordingly, the amount of each payment to a non-mirror Code 
     possession will be an estimate of the aggregate amount of the 
     credits that would be allowed to the possession's residents 
     if the credit provided by the provision to U.S. residents 
     were provided by the possession to its residents. This 
     payment will not be made to any U.S. possession unless that 
     possession has a plan that has been approved by the Secretary 
     under which the possession will promptly distribute the 
     payment to its residents.
       General rules
       No credit against U.S. income tax is permitted under the 
     provision for any person to whom a credit is allowed against 
     possession income taxes as a result of the provision (for 
     example, under that possession's mirror income tax). 
     Similarly, no credit against U.S. income tax is permitted for 
     any person who is eligible for a payment under a non-mirror 
     code possession's plan for distributing to its residents the 
     payment described above from the U.S. Treasury.
       For purposes of the payments to the possessions, the 
     Commonwealth of Puerto Rico and the Commonwealth of the 
     Northern Mariana Islands are considered possessions of the 
     United States.
       For purposes of the rule permitting the Treasury Secretary 
     to disburse appropriated amounts for refunds due from certain 
     credit provisions of the Internal Revenue Code of 1986, the 
     payments required to be made to possessions under the 
     provision are treated in the same manner as a refund due from 
     the credit allowed under the provision.
     Federal programs or Federally-assisted programs
       Any credit or refund allowed or made to an individual under 
     this provision (including to 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.
---------------------------------------------------------------------------
     \5\ The credit for certain government employees is available 
     for 2009. The credit is $250 ($500 for a joint return where 
     both spouses are eligible individuals). An eligible 
     individual for these purposes is an individual: (1) who 
     receives an amount as a pension or annuity for service 
     performed in the employ of the United States or any State or 
     any instrumentality thereof, which is not considered 
     employment for purposes of Social Security taxes; and (2) who 
     does not receive an economic recovery payment under the 
     Veterans Administration, Railroad Retirement Board, or the 
     Social Security Administration.
---------------------------------------------------------------------------
       Each tax return on which this credit is claimed must 
     include the social security number of the taxpayer (in the 
     case of a joint return, the social security number of at 
     least one spouse).
     Treatment of the U.S. possessions
       The conference agreement follows the House bill and the 
     Senate amendment.
     Federal programs or Federally-assisted programs
       The conference agreement follows the House bill and the 
     Senate amendment.
     Income tax withholding
       The conference agreement follows the Senate amendment.
     Effective date
       The provision applies to taxable years beginning after 
     December 31, 2008.
     2. Increase in the earned income tax credit (sec. 1101 of the 
         House bill, sec. 1002 of the Senate amendment, sec. 1002 
         of the conference agreement, and sec. 32 of the Code)


                              Present Law

     Overview
       Low- and moderate-income workers may be eligible for the 
     refundable earned income tax credit (``EITC''). Eligibility 
     for the EITC is based on earned income, adjusted gross 
     income, investment income, filing status, and immigration and 
     work status in the United States. The amount of the EITC is 
     based on the presence and number of qualifying children in 
     the worker's family, as well as on adjusted gross income and 
     earned income.
       The EITC generally equals a specified percentage of earned 
     income \6\ up to a maximum dollar amount. The maximum amount 
     applies over a certain income range and then diminishes to 
     zero over a specified phaseout range. For taxpayers with 
     earned income (or adjusted gross income (AGI), if greater) in 
     excess of the beginning of the phaseout range, the maximum 
     EITC amount is reduced by the phaseout rate multiplied by the 
     amount of earned income (or AGI, if greater) in excess of the 
     beginning of the phaseout range. For taxpayers with earned 
     income (or AGI, if greater) in excess of the end of the 
     phaseout range, no credit is allowed.
---------------------------------------------------------------------------
     \6\ Earned income is defined as (1) wages, salaries, tips, 
     and other employee compensation, but only if such amounts are 
     includible in gross income, plus (2) the amount of the 
     individual's net self-employment earnings.
---------------------------------------------------------------------------
       An individual is not eligible for the EITC if the aggregate 
     amount of disqualified income of the taxpayer for the taxable 
     year exceeds $3,100 (for 2009). This threshold is indexed for 
     inflation. Disqualified income is the sum of: (1) interest 
     (taxable and tax exempt); (2) dividends; (3) net rent and 
     royalty income (if greater than zero); (4) capital gains net 
     income; and (5) net passive income (if greater than zero) 
     that is not self-employment income.
       The EITC is a refundable credit, meaning that if the amount 
     of the credit exceeds the taxpayer's Federal income tax 
     liability, the excess is payable to the taxpayer as a direct 
     transfer payment. Under an advance payment system, eligible 
     taxpayers may elect to receive the credit in their paychecks, 
     rather than waiting to claim a refund on their tax returns 
     filed by April 15 of the following year.
     Filing status
       An unmarried individual may claim the EITC if he or she 
     files as a single filer or as a head of household. Married 
     individuals generally may not claim the EITC unless they file 
     jointly. An exception to the joint return filing requirement 
     applies to certain spouses who are separated. Under this 
     exception, a married taxpayer who is separated from his or 
     her spouse for the last six months of the taxable year shall 
     not be considered as married (and, accordingly, may file a 
     return as head of household and claim the EITC), provided 
     that the taxpayer maintains a household that constitutes the 
     principal place of abode for a dependent child (including a 
     son, stepson, daughter, stepdaughter, adopted child, or a 
     foster child) for over half the taxable year,\7\ and pays 
     over half the cost of maintaining the household in which he 
     or she resides with the child during the year.
---------------------------------------------------------------------------
     \7\ A foster child must reside with the taxpayer for the 
     entire taxable year.
---------------------------------------------------------------------------
     Presence of qualifying children and amount of the earned 
         income credit
       Three separate credit schedules apply: one schedule for 
     taxpayers with no qualifying children, one schedule for 
     taxpayers with no qualifying child, and one schedule for 
     taxpayers with more than one qualifying child.\8\
---------------------------------------------------------------------------
     \8\ All income thresholds are indexed for inflation annually.
---------------------------------------------------------------------------
       Taxpayers with no qualifying children may claim a credit if 
     they are over age 24 and below age 65. The credit is 7.65 
     percent of earnings up to $5,970, resulting in a maximum 
     credit of $457 for 2009. The maximum is available for those 
     with incomes between $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.
---------------------------------------------------------------------------
     \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\
---------------------------------------------------------------------------
     \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.
---------------------------------------------------------------------------
     \13\ Sec. 42.
---------------------------------------------------------------------------
     Volume limits
       A low-income housing credit is allowable only if the owner 
     of a qualified building receives a housing credit allocation 
     from the State or local housing credit agency. Generally, the 
     aggregate credit authority provided annually to each State 
     for calendar year 2009 is $2.30 per resident, with a minimum 
     annual cap of $2,665,000 for certain small population States. 
     \14\ These amounts are indexed for inflation. Projects that 
     also receive financing with proceeds of tax-exempt bonds 
     issued subject to the private activity bond volume limit do 
     not require an allocation of the low-income housing credit.
---------------------------------------------------------------------------
     \14\ Rev. Proc. 2008-66.
---------------------------------------------------------------------------
     Basic rule for Federal grants
       The basis of a qualified building must be reduced by the 
     amount of any federal grant with respect to such building.


                               House Bill

     Low-income housing grant election amount
       The Secretary of the Treasury shall make a grant to the 
     State housing credit agency of each State in an amount equal 
     to the low-income housing grant election amount.
       The low-income housing grant election amount for a State is 
     an amount elected by the State subject to certain limits. The 
     maximum low-income housing grant election amount for a State 
     may not exceed 85 percent of the product of ten and the sum 
     of the State's: (1) unused housing credit ceiling for 2008; 
     (2) any returns to the State during 2009 of credit 
     allocations previously made by the State; (3) 40 percent of 
     the State's 2009 credit allocation; and (4) 40 percent of the 
     State's share of the national pool allocated in 2009, if any.
       Grants under this provision are not taxable income to 
     recipients.
     Subawards to low-income housing credit buildings
       A State receiving a grant under this provision is to use 
     these monies to make subawards to finance the construction, 
     or acquisition and rehabilitation of qualified low-income 
     buildings as defined under the low-income housing credit. A 
     subaward may be made to finance a qualified low-income 
     building regardless of whether the building has an allocation 
     of low-income housing credit. However, in the case of 
     qualified low-income buildings without allocations of the 
     low-income housing credit, the State housing credit agency 
     must make a determination that the subaward with respect to 
     such building will increase the total funds available to the 
     State to build and rehabilitate affordable housing. In 
     conjunction with this determination the State housing credit 
     agency must establish a process in which applicants for the 
     subawards must demonstrate

[[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.
---------------------------------------------------------------------------
     \15\ The State housing credit agency may collect reasonable 
     fees from subaward recipients to cover the expenses of the 
     agency's asset management duties. Alternatively, the State 
     housing credit agency may retain a thirdparty to perform 
     these asset management duties.
---------------------------------------------------------------------------
       Any grant funds not used to make subawards before January 
     1, 2011 and any grant monies from subawards returned on or 
     after January 1, 2011 must be returned to the Secretary of 
     the Treasury.
     Basic rule for Federal grants
       The grants received under this provision do not reduce tax 
     basis of a qualified low-income building.
     Reduction in low-income housing credit volume limit for 2009
       The otherwise applicable low-income housing credit volume 
     limit for any State for 2009 is reduced by the amount taken 
     into account in determining the low-income housing grant 
     election amount.
     Appropriations
       The provision appropriates to the Secretary of the Treasury 
     such sums as may be necessary to carry out this provision.
     Effective date
       The provision is effective on the date of enactment.


                            Senate Amendment

       No provision.


                          Conference Agreement

       The conference agreement follows the House bill.
     8. Election to accelerate the low-income housing credit 
         allocation (sec. 1903 of the Senate amendment)


                              Present Law

     In general
       The low-income housing credit may be claimed over a 10-year 
     period by owners of certain residential rental property for 
     the cost of rental housing occupied by tenants having incomes 
     below specified levels. \16\ The amount of the credit for any 
     taxable year in the credit period is the applicable 
     percentage of the qualified basis of each qualified low-
     income building. The qualified basis of any qualified low-
     income building for any taxable year equals the applicable 
     fraction of the eligible basis of the building.
---------------------------------------------------------------------------
     \16\ Sec. 42.
---------------------------------------------------------------------------
     Volume limits
       A low-income housing credit is allowable only if the owner 
     of a qualified building receives a housing credit allocation 
     from the State or local housing credit agency. Generally, the 
     aggregate credit authority provided annually to each State 
     for calendar year 2009 is $2.30 per resident, with a minimum 
     annual cap of $2,665,000 for certain small population States. 
     \17\ These amounts are indexed for inflation. Projects that 
     also receive financing with proceeds of tax-exempt bonds 
     issued subject to the private activity bond volume limit do 
     not require an allocation of the low-income housing credit.
---------------------------------------------------------------------------
     \17\ Rev. Proc. 2008-66.
---------------------------------------------------------------------------


                               House Bill

       No provision.


                            Senate Amendment

       The provision allows a taxpayer election to double the 
     amount of the otherwise allowable low-income housing tax 
     credit with respect to a project for each of the taxpayer's 
     first three taxable years beginning after December 31, 2008. 
     The otherwise allowable low-income housing tax credit over 
     the remaining credit period for the project with respect to a 
     taxpayer making the election will be reduced on a pro rata 
     basis by an amount equal to the acceleration in the first 
     three years.
       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\
---------------------------------------------------------------------------
     \18\ The rule applicable to the adoption credit and child 
     credit is subject to the EGTRRA sunset.
---------------------------------------------------------------------------


                               House Bill

       No provision.


                            Senate Amendment

       The Senate amendment provides that the individual AMT 
     exemption amount for taxable years beginning in 2009 is 
     $70,950, in the case of married individuals filing a joint 
     return and surviving spouses; (2) $46,700 in the case of 
     other unmarried individuals; and (3) $35,475 in the case of 
     married individuals filing separate returns.
       For taxable years beginning in 2009, the provision allows 
     an individual to offset the entire regular tax liability and 
     alternative minimum tax liability by the nonrefundable 
     personal credits.
       Effective date.--The provision is effective for taxable 
     years beginning in 2009.


                          Conference Agreement

       The conference agreement follows the Senate amendment.

                     B. Tax Incentives for Business

     1. Special allowance for certain property acquired during 
         2009 and extension of election to accelerate AMT and 
         research credits in lieu of bonus depreciation (sec. 1401 
         of the House bill, sec. 1201 of the Senate amendment, 
         sec. 1201 of the conference agreement, and sec. 168(k) of 
         the Code)


                              Present Law

       An additional first-year depreciation deduction is allowed 
     equal to 50 percent of the adjusted basis of qualified 
     property placed in service during 2008 (and 2009 for certain 
     longer-lived and transportation property).\19\ The additional 
     first-year depreciation deduction is allowed for both regular 
     tax and alteative minimum tax purposes for the taxable year 
     in which the property is placed in service.\20\ The basis of 
     the property and the depreciation allowances in the year of 
     purchase and later years are appropriately adjusted to 
     reflect the additional first-year depreciation deduction. In 
     addition, there are no adjustments to the allowable amount of 
     depreciation for purposes of computing a taxpayer's 
     alternative minimum taxable income with respect to property 
     to which the provision applies. The amount of the additional 
     first-year depreciation deduction is not affected by a short 
     taxable year. The taxpayer may elect out of additional first-
     year depreciation for any class of property for any taxable 
     year.
---------------------------------------------------------------------------
     \19\ Sec. 168(k). The additional first-year depreciation 
     deduction is subject to the general rules regarding whether 
     an item is deductible under section 162 or instead is subject 
     to capitalization under section 263 or section 263A.
     \20\ However, the additional first-year depreciation 
     deduction is not allowed for purposes of computing earnings 
     and profits.
---------------------------------------------------------------------------
       The interaction of the additional first-year depreciation 
     allowance with the otherwise applicable depreciation 
     allowance may be illustrated as follows. Assume that in 2008, 
     a taxpayer purchases new depreciable property and places it 
     in service.\21\ The property's cost is $1,000, and it is 
     five-year property subject to the half-year convention. The 
     amount of additional first-year depreciation allowed is $500. 
     The remaining $500 of the cost of the property is deductible 
     under the rules applicable to 5-year property. Thus, 20 
     percent, or $100, is also allowed as a depreciation deduction 
     in 2008. The total depreciation deduction with respect to the 
     property for 2008 is $600. The remaining $400 cost of the 
     property is recovered under otherwise applicable rules for 
     computing depreciation.
---------------------------------------------------------------------------
     \21\ Assume that the cost of the property is not eligible for 
     expensing under section 179.
---------------------------------------------------------------------------
       In order for property to qualify for the additional first-
     year depreciation deduction it must meet all of the following 
     requirements. First, the property must be (1) property to 
     which MACRS applies with an applicable recovery period of 20 
     years or less, (2) water

[[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\
---------------------------------------------------------------------------
     \22\ A special rule precludes the additional first-year 
     depreciation deduction for any property that is required to 
     be depreciated under the alternative depreciation system of 
     MACRS.
---------------------------------------------------------------------------
       Second, the original use \23\ of the property must commence 
     with the taxpayer after December 31, 2007.\24\ Third, the 
     taxpayer must purchase the property within the applicable 
     time period. Finally, the property must be placed in service 
     after December 31, 2007, and before January 1, 2009. An 
     extension of the placed in service date of one year (i.e., to 
     January 1, 2010) is provided for certain property with a 
     recovery period of ten years or longer and certain 
     transportation property.\25\ Transportation property is 
     defined as tangible personal property used in the trade or 
     business of transporting persons or property.
---------------------------------------------------------------------------
     \23\ The term ``original use'' means the first use to which 
     the property is put, whether or not such use corresponds to 
     the use of such property by the taxpayer.
     If in the normal course of its business a taxpayer sells 
     fractional interests in property to unrelated third parties, 
     then the original use of such property begins with the first 
     user of each fractional interest (i,e., each fractional owner 
     is considered the original user of its proportionate share of 
     the property).
     \24\ A special rule applies in the case of certain leased 
     property. In the case of any property that is originally 
     placed in service by a person and that is sold to the 
     taxpayer and leased back to such person by the taxpayer 
     within three months after the date that the property was 
     placed in service, the property would be treated as 
     originally placed in service by the taxpayer not earlier than 
     the date that the property is used under the leaseback.
     If property is originally placed in service by a lessor 
     (including by operation of section 168(k)(2)(D)(i)), such 
     property is sold within three months after the date that the 
     property was placed in service, and the user of such property 
     does not change, then the property is treated as originally 
     placed in service by the taxpayer not earlier than the date 
     of such sale.
     \25\ In order for property to qualify for the extended placed 
     in service date, the property is required to have an 
     estimated production period exceeding one year and a cost 
     exceeding $1 million.
---------------------------------------------------------------------------
       The applicable time period for acquired property is (1) 
     after December 31, 2007, and before January 1, 2009, but only 
     if no binding written contract for the acquisition is in 
     effect before January 1, 2008, or (2) pursuant to a binding 
     written contract which was entered into after December 31, 
     2007, and before January 1, 2009.\26\ With respect to 
     property that is manufactured, constructed, or produced by 
     the taxpayer for use by the taxpayer, the taxpayer must begin 
     the manufacture, construction, or production of the property 
     after December 31, 2007, and before January 1, 2009. Property 
     that is manufactured, constructed, or produced for the 
     taxpayer by another person under a contract that is entered 
     into prior to the manufacture, construction, or production of 
     the property is considered to be manufactured, constructed, 
     or produced by the taxpayer. For property eligible for the 
     extended placed in service date, a special rule limits the 
     amount of costs eligible for the additional first-year 
     depreciation. With respect to such property, only the portion 
     of the basis that is properly attributable to the costs 
     incurred before January 1, 2009 (``progress expenditures'') 
     is eligible for the additional first-year depreciation.\27\
---------------------------------------------------------------------------
     \26\ Property does not fail to qualify for the additional 
     first-year depreciation merely because a binding written 
     contract to acquire a component of the property is in effect 
     prior to January 1, 2008.
     \27\ For purposes of determining the amount of eligible 
     progress expenditures, it is intended that rules similar to 
     sec. 46(d)(3) as in effect prior to the Tax Reform Act of 
     1986 shall apply.
---------------------------------------------------------------------------
       Property does not qualify for the additional first-year 
     depreciation deduction when the user of such property (or a 
     related party) would not have been eligible for the 
     additional first-year depreciation deduction if the user (or 
     a related party) were treated as the owner. For example, if a 
     taxpayer sells to a related party property that was under 
     construction prior to January 1, 2008, the property does not 
     qualify for the additional first-year depreciation deduction. 
     Similarly, if a taxpayer sells to a related party property 
     that was subject to a binding written contract prior to 
     January 1, 2008, the property does not qualify for the 
     additional first-year depreciation deduction. As a further 
     example, if a taxpayer (the lessee) sells property in a sale-
     leaseback arrangement, and the property otherwise would not 
     have qualified for the additional first-year depreciation 
     deduction if it were owned by the taxpayer-lessee, then the 
     lessor is not entitled to the additional first-year 
     depreciation deduction.
       The limitation on the amount of depreciation deductions 
     allowed with respect to certain passenger automobiles (sec. 
     280F) is increased in the first year by $8,000 for 
     automobiles that qualify (and do not elect out of the 
     increased first year deduction). The $8,000 increase is not 
     indexed for inflation.
       Corporations otherwise eligible for additional first year 
     depreciation under section 168(k) may elect to claim 
     additional research or minimum tax credits in lieu of 
     claiming depreciation under section 168(k) for ``eligible 
     qualified property'' placed in service after March 31, 2008 
     and before December 31, 2008.\28\ A corporation making the 
     election forgoes the depreciation deductions allowable under 
     section 168(k) and instead increases the limitation under 
     section 38(c) on the use of research credits or section 53(c) 
     on the use of minimum tax credits.\29\ The increases in the 
     allowable credits are treated as refundable for purposes of 
     this provision. The depreciation for qualified property is 
     calculated for both regular tax and AMT purposes using the 
     straight-line method in place of the method that would 
     otherwise be used absent the election under this provision.
---------------------------------------------------------------------------
     \28\ Sec. 168(k)(4). In the case of an electing corporation 
     that is a partner in a partnership, the corporate partner's 
     distributive share of partnership items is determined as if 
     section 168(k) does not apply to any eligible qualified 
     property and the straight line method is used to calculate 
     depreciation of such property.
     \29\ Special rules apply to an applicable partnership.
---------------------------------------------------------------------------
       The research credit or minimum tax credit limitation is 
     increased by the bonus depreciation amount, which is equal to 
     20 percent of bonus depreciation \30\ for certain eligible 
     qualified property that could be claimed absent an election 
     under this provision. Generally, eligible qualified property 
     included in the calculation is bonus depreciation property 
     that meets the following requirements: (1) the original use 
     of the property must commence with the taxpayer after March 
     31, 2008; (2) the taxpayer must purchase the property either 
     (a) after March 31, 2008, and before January 1, 2009, but 
     only if no binding written contract for the acquisition is in 
     effect before April 1, 2008,\31\ or (b) pursuant to binding 
     written contract which was entered into after March 31, 2008, 
     and before January 1, 2009; \32\ and (3) the property must be 
     placed in service after March 31, 2008, and before January 1, 
     2009 (January 1, 2010 for certain longer-lived and 
     transportation property).
---------------------------------------------------------------------------
     \30\ For this purpose, bonus depreciation is the difference 
     between (i) the aggregate amount of depreciation for all 
     eligible qualified property determined if section 168(k)(1) 
     applied using the most accelerated depreciation method 
     (determined without regard to this provision), and shortest 
     life allowable for each property, and (ii) the amount of 
     depreciation that would be determined if section 168(k)(1) 
     did pot ply using the same method and life for each property.
     \31\ In the case of passenger aircraft, the written binding 
     contract limitation does not apply.
     \32\ Special rules apply to property manufactured, 
     constructed, or produced by the taxpayer for use by the 
     taxpayer.
---------------------------------------------------------------------------
       The bonus depreciation amount is limited to the lesser of: 
     (1) $30 million, or (2) six percent of the sum of research 
     credit carryforwards from taxable years beginning before 
     January 1, 2006 and minimum tax credits allocable to the 
     adjusted minimum tax imposed for taxable years beginning 
     before January 1, 2006. All corporations treated as a single 
     employer under section 52(a) are treated as one taxpayer for 
     purposes of the limitation, as well as for electing the 
     application of this provision.


                               House Bill

       The provision extends the additional first-year 
     depreciation deduction for one year generally through 2009 
     (through 2010 for certain longer-lived and transportation 
     property).\33\
---------------------------------------------------------------------------
     \33\ The provision does not modify the property eligible for 
     the election to accelerate AMT and research credits in lieu 
     of bonus depreciation under section 168(k)(4). However, the 
     provision includes a technical amendment to section 
     168(k)(4)(D) providing that no written binding contract for 
     the acquisition of eligible qualified property may be in 
     effect before April 1, 2008 (effective for taxable years 
     ending after March 31, 2008).
---------------------------------------------------------------------------
       Effective date.--The provision is effective for property 
     placed in service after December 31, 2008.


                            Senate Amendment

       The provision extends the additional first-year 
     depreciation deduction for one year, generally through 2009 
     (through 2010 for certain longer-lived and transportation 
     property).
       The provision generally permits corporations to increase 
     the research credit or minimum tax credit limitation by the 
     bonus depreciation amount with respect to certain property 
     placed in service in 2009 (2010 in the case of certain 
     longer-lived and transportation property). The provision 
     applies with respect to extension property, which is defined 
     as property that is eligible qualified property solely 
     because it meets the requirements under the extension of the 
     special allowance for certain property acquired during 2009.
       Under the provision, a taxpayer that has made an election 
     to increase the research credit or minimum tax credit 
     limitation for eligible qualified property for its first 
     taxable year ending after March 31, 2008, may choose not to 
     make this election for extension property. Further, the 
     provision allows a taxpayer that has not made an election for 
     eligible qualified property for its first taxable year ending 
     after March 31, 2008, to make the election for extension 
     property for its first taxable year ending after December 31, 
     2008, and for each subsequent year. In the case of a taxpayer 
     electing to increase the research or minimum tax credit for 
     both eligible qualified property and extension property, a 
     separate bonus depreciation amount, maximum amount, and 
     maximum increase amount is computed and applied to each group 
     of property.\34\
---------------------------------------------------------------------------
     \34\ In computing the maximum amount, the maximum increase 
     amount for extension property is reduced by bonus 
     depreciation amounts for preceding taxable years only with 
     respect to extension property.
---------------------------------------------------------------------------
       Effective date.--The extension of the additional first-year 
     depreciation deduction is generally effective for property 
     placed in service after December 31, 2008.
       The extension of the election to accelerate AMT and 
     research credits in lieu of bonus depreciation is effective 
     for taxable years ending after December 31, 2008.

[[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.
---------------------------------------------------------------------------
     \35\ Additional section 179 incentives are provided with 
     respect to qualified property meeting applicable requirements 
     that is used by a business in an empowerment zone (sec. 
     1397A) or a renewal community (sec. 1400J), qualified section 
     179 Gulf Opportunity Zone property (sec. 1400N(e)), qualified 
     Recovery Assistance property placed in service in the Kansas 
     disaster area (Pub. L. No. 110-234, sec. 15345 (2008)), and 
     qualified disaster assistance property (sec. 179(e)).
---------------------------------------------------------------------------
       The amount eligible to be expensed for a taxable year may 
     not exceed the taxable income for a taxable year that is 
     derived from the active conduct of a trade or business 
     (determined without regard to this provision). Any amount 
     that is not allowed as a deduction because of the taxable 
     income limitation may be carried forward to succeeding 
     taxable years (subject to similar limitations). No general 
     business credit under section 38 is allowed with respect to 
     any amount for which a deduction is allowed under section 
     179. An expensing election is made under rules prescribed by 
     the Secretary.\36\
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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.
---------------------------------------------------------------------------
       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\
---------------------------------------------------------------------------
     \37\ Sec. 179(c)(2).
---------------------------------------------------------------------------


                               House Bill

       The provision extends the $250,000 and $800,000 amounts to 
     taxable years beginning in 2009.
       Effective date.--The provision is effective for taxable 
     years beginning after December 31, 2008.


                            Senate Amendment

       The Senate amendment is the same as the House bill.


                          Conference Agreement

       The conference agreement follows the House bill and the 
     Senate amendment.
     3. Five-year carryback of operating losses (secs. 1411 and 
         1412 of the House bill, secs. 1211 and 1212 of the Senate 
         amendment, sec. 1211 of the conference agreement, and 
         sec. 172 of the Code)


                              Present Law

       Under present law, a net operating loss (``NOL'') generally 
     means the amount by which a taxpayer's business deductions 
     exceed its gross income. In general, an NOL may be carried 
     back two years and carried over 20 years to offset taxable 
     income in such years.\38\ NOLs offset taxable income in the 
     order of the taxable years to which the NOL may be 
     carried.\39\
---------------------------------------------------------------------------
     \38\Sec. 172(b)(1)(A).
     \39\ Sec. 172(b)(2).
---------------------------------------------------------------------------
       The alternative minimum tax rules provide that a taxpayer's 
     NOL deduction cannot reduce the taxpayer's alternative 
     minimum taxable income (``AMTI'') by more than 90 percent of 
     the AMTI.
       Different rules apply with respect to NOLs arising in 
     certain circumstances. A three-year carryback applies with 
     respect to NOLs (1) arising from casualty or theft losses of 
     individuals, or (2) attributable to Presidentially declared 
     disasters for taxpayers engaged in a farming business or a 
     small business. A five-year carryback applies to NOLs (1) 
     arising from a farming loss (regardless of whether the loss 
     was incurred in a Presidentially declared disaster area), (2) 
     certain amounts related to Hurricane Katrina, Gulf 
     Opportunity Zone, and Midwestern Disaster Area, or (3) 
     qualified disaster losses.\40\ Special rules also apply to 
     real estate investment trusts (no carryback), specified 
     liability losses (10-year carryback), and excess interest 
     losses (no carryback to any year preceding a corporate equity 
     reduction transaction). Additionally, a special rule applies 
     to certain electric utility companies.
---------------------------------------------------------------------------
     \40\ Sec. 172(b)(1)(J).
---------------------------------------------------------------------------
       In the case of a life insurance company, present law allows 
     a deduction for the operations loss carryovers and carrybacks 
     to the taxable year, in lieu of the deduction for net 
     operation losses allowed to other corporations.\41\ A life 
     insurance company is permitted to treat a loss from 
     operations (as defined under section 810(c)) for any taxable 
     year as an operations loss carryback to each of the three 
     taxable years preceding the loss year and an operations loss 
     carryover to each of the 15 taxable years following the loss 
     year.\42\ Special rules apply to new life insurance 
     companies.
---------------------------------------------------------------------------
     \41\ Secs. 810, 805(a)(5).
     \42\ Sec. 810(b)(1).
---------------------------------------------------------------------------


                               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.
---------------------------------------------------------------------------
     \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.
---------------------------------------------------------------------------
       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.
---------------------------------------------------------------------------
       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.
---------------------------------------------------------------------------
     \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.
---------------------------------------------------------------------------
       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.
---------------------------------------------------------------------------
     \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.
---------------------------------------------------------------------------
       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.
---------------------------------------------------------------------------
     \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.
---------------------------------------------------------------------------
     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\
---------------------------------------------------------------------------
     \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\
---------------------------------------------------------------------------
     \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\
---------------------------------------------------------------------------
     \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.
---------------------------------------------------------------------------
     \84\ Treas. Reg. sec. 1.61-12(c)(2)(ii). Treas. Reg. sec. 
     1.1275-1(b) defines ``adjusted issue price.''
---------------------------------------------------------------------------
       Debt-for-debt exchanges
       If a debtor issues a debt instrument in satisfaction of its 
     indebtedness, the debtor is treated as having satisfied the 
     indebtedness with an amount of money equal to the issue price 
     of the newly issued debt instrument.\85\ The issue price of 
     such newly issued debt instrument generally is determined 
     under sections 1273 and 1274.\86\ Similarly, a ``significant 
     modification'' of a debt instrument, within the meaning of 
     Treas. Reg. sec. 1.1001-3, results in an exchange of the 
     original debt instrument for a modified instrument. In such 
     cases, where the issue price of the modified debt instrument 
     is less than the adjusted issue price of the original debt 
     instrument, the debtor will have income from the cancellation 
     of indebtedness.
---------------------------------------------------------------------------
     \85\ Sec. 108(e)(1 0)(A).
     \86\ Sec. 108(e)(10)(B).
---------------------------------------------------------------------------
       If any new debt instrument is issued (including as a result 
     of a significant modification to a debt instrument), such 
     debt instrument will have original issue discount equal to 
     the excess (if any) of such debt instrument's stated 
     redemption price at maturity over its issue price.\87\ In 
     general, an issuer of a debt instrument with original issue 
     discount may deduct for any taxable year, with respect to 
     such debt instrument, an amount of original issue discount 
     equal the aggregate daily portions of the original issue 
     discount for days during such taxable year.\88\
---------------------------------------------------------------------------
     \87\ Sec. 1273.
     \88\ Sec. 163(e).
---------------------------------------------------------------------------


                       Equity-for-debt exchanges

       If a corporation transfers stock, or a partnership 
     transfers a capital or profits interest in such partnership, 
     to a creditor in satisfaction of its indebtedness, then such 
     corporation or partnership is treated as having satisfied its 
     indebtedness with an amount of money equal to the fair market 
     value of the stock or interest.\89\
---------------------------------------------------------------------------
     \89\ Sec. 108(e)(8).
---------------------------------------------------------------------------
       Related party acquisitions
       Indebtedness directly or indirectly acquired by a person 
     who bears a relationship to the debtor described in section 
     267(b) or section 707(b) is treated as if it were acquired by 
     the debtor.\90\ Thus, where a debtor's indebtedness is 
     acquired for less than its adjusted issue price by a person 
     related to the debtor (within the meaning of section 267(b) 
     or 707(b)), the debtor recognizes income from the 
     cancellation of indebtedness. Regulations under section 108 
     provide that the indebtedness acquired by the related party 
     is

[[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.
---------------------------------------------------------------------------
     \90\ Sec. 108(e)(4).
     \91\ Treas. Reg. sec. 1.108-2(g).
     \92\ Id.
---------------------------------------------------------------------------
       In the case of a deemed issuance under Treas. Reg. sec. 
     1.108-2(g), the related holder does not recognize any gain or 
     loss, and the related holder's adjusted basis in the 
     indebtedness remains the same as it was immediately before 
     the deemed issuance.\93\ The deemed issuance is treated as a 
     purchase of the indebtedness by the related holder for 
     purposes of section 1272(a)(7) (pertaining to reduction of 
     original issue discount where a subsequent holder pays 
     acquisition premium) and section 1276 (pertaining to 
     acquisitions of debt at a market discount).\94\
---------------------------------------------------------------------------
     \93\ Treas. Reg. sec. 1.108-2(g)(2).
     \94\ Id.
---------------------------------------------------------------------------
       Contribution of a debt instrument to capital of a 
           corporation
       Where a debtor corporation acquires its indebtedness from a 
     shareholder as a contribution to capital, section 118 \95\ 
     does not apply, but the corporation is treated as satisfying 
     such indebtedness with an amount of money equal to the 
     shareholder's adjusted basis in the indebtedness.
---------------------------------------------------------------------------
     \95\ Section 118 provides, in general, that in the case of a 
     corporation, gross income does not include any contribution 
     to the capital of the taxpayer.
---------------------------------------------------------------------------


                               House Bill

       No provision.


                            Senate Amendment

       The provision permits a taxpayer to elect to defer income 
     from cancellation of indebtedness recognized by the taxpayer 
     as a result of a repurchase by (1) the taxpayer or (2) a 
     person who bears a relationship to the taxpayer described in 
     section 267(b) or section 707(b), of a ``debt instrument'' 
     that was issued by the taxpayer. The provision applies only 
     to repurchases of debt that (1) occur after December 31, 
     2008, and prior to January 1, 2011, and (2) are repurchases 
     for cash. Thus, for example, the provision does not apply to 
     a debt-for-debt exchange or to any exchange of the taxpayer's 
     equity for a debt instrument of the taxpayer. For purposes of 
     the provision, a ``debt instrument'' is broadly defined to 
     include any bond, debenture, note, certificate or any other 
     instrument or contractual arrangement constituting 
     indebtedness.
       Income from the discharge of indebtedness in connection 
     with the repurchase of a debt instrument in 2009 or 2010 must 
     be included in the gross income of the taxpayer ratably in 
     the eight taxable years beginning with (1) for repurchases in 
     2009, the second taxable year following the taxable year in 
     which the repurchase occurs or (2) for repurchases in 2010, 
     the taxable year following the taxable year in which the 
     repurchase occurs. The provision authorizes the Secretary of 
     the Treasury to prescribe such regulations as may be 
     necessary or appropriate for purposes of applying the 
     provision.
       Effective date.--The provision applies to discharges in 
     taxable years ending after December 31, 2008.


                          Conference Agreement

       The conference agreement follows the Senate amendment with 
     modifications. The provision permits a taxpayer to elect to 
     defer cancellation of indebtedness income arising from a 
     ``reacquisition'' of ``an applicable debt instrument'' after 
     December 31, 2008, and before January 1, 2011. Income 
     deferred pursuant to the election must be included in the 
     gross income of the taxpayer ratably in the five taxable 
     years beginning with (1) for repurchases in 2009, the fifth 
     taxable year following the taxable year in which the 
     repurchase occurs or (2) for repurchases in 2010, the fourth 
     taxable year following the taxable year in which the 
     repurchase occurs.
       An ``applicable debt instrument'' is any debt instrument 
     issued by (1) a C corporation or (2 any other person in 
     connection with the conduct of a trade or business by such 
     person. For purposes of the provision, a ``debt instrument'' 
     is broadly defined to include any bond, debenture, note, 
     certificate or any other instrument or contractual 
     arrangement constituting indebtedness (within the meaning of 
     section 1275(a)(1)).
       A ``reacquisition'' is any ``acquisition'' of an applicable 
     debt instrument by (1) the debtor that issued (or is 
     otherwise the obligor under) such debt instrument or (2) any 
     person related to the debtor within the meaning of section 
     108(e)(4). For purposes of the provision, an ``acquisition'' 
     includes, without limitation, (1) an acquisition of a debt 
     instrument for cash, (2) the exchange of a debt instrument 
     for another debt instrument (including an exchange resulting 
     from a modification of a debt instrument), (3) the exchange 
     of corporate stock or a partnership interest for a debt 
     instrument, (4) the contribution of a debt instrument to the 
     capital of the issuer, and (5) the complete forgiveness of a 
     debt instrument by a holder of such instrument.
       Special rules for debt-for-debt exchanges
       If a taxpayer makes the election provided by the provision 
     for a debt-for-debt exchange in which the newly issued debt 
     instrument issued (or deemed issued, including by operation 
     of the rules in Treas. Reg. sec. 1.108-2(g)) in satisfaction 
     of an outstanding debt instrument of the debtor has original 
     issue discount, then any otherwise allowable deduction for 
     original issue discount with respect to such newly issued 
     debt instrument that (1) accrues before the first year of the 
     five-taxable-year period in which the related, deferred 
     discharge of indebtedness income is included in the gross 
     income of the taxpayer and (2) does not exceed such related, 
     deferred discharge of indebtedness income, is deferred and 
     allowed as a deduction ratably over the same five-taxable-
     year period in which the deferred discharge of indebtedness 
     income is included in gross income.
       This rule can apply also in certain cases when a debtor 
     reacquires its debt for cash. If the taxpayer issues a debt 
     instrument and the proceeds of such issuance are used 
     directly or indirectly to reacquire a debt instrument of the 
     taxpayer, the provision treats the newly issued debt 
     instrument as if it were issued in satisfaction of the 
     retired debt instrument. If the newly issued debt instrument 
     has original issue discount, the rule described above 
     applies. Thus, all or a portion of the interest deductions 
     with respect to original issue discount on the newly issued 
     debt instrument are deferred into the five-taxable-year 
     period in which the discharge of indebtedness income is 
     recognized. Where only a portion of the proceeds of a new 
     issuance are used by a taxpayer to satisfy outstanding debt, 
     then the deferral rule applies to the portion of the original 
     issue discount on the newly issued debt instrument that is 
     equal to the portion of the proceeds of such newly issued 
     instrument used to retire outstanding debt of the taxpayer.
       Acceleration of deferred items
       Cancellation of indebtedness income and any related 
     deduction for original issue discount that is deferred by an 
     electing taxpayer (and has not previously been taken into 
     account) generally is accelerated and taken into income in 
     the taxable year in which the taxpayer: (1) dies, (2) 
     liquidates or sells substantially all of its assets 
     (including in a title 11 or similar case), (3) ceases to do 
     business, or (4) or is in similar circumstances. In a case 
     under title 11 or a similar case, any deferred items are 
     taken into income as of the day before the petition is filed. 
     Deferred items are accelerated in a case under Title 11 where 
     the taxpayer liquidates, sells substantially all of its 
     assets, or ceases to do business, but not where a taxpayer 
     reorganizes and emerges from the Title 11 case. In the case 
     of a pass thru entity, this acceleration rule also applies to 
     the sale, exchange, or redemption of an interest in the 
     entity by a holder of such interest.
       Special rule for partnerships
       In the case of a partnership, any income deferred under the 
     provision is allocated to the partners in the partnership 
     immediately before the discharge of indebtedness in the 
     manner such amounts would have been included in the 
     distributive shares of such partners under section 704 if 
     such income were recognized at the time of the discharge. Any 
     decrease in a partner's share of liabilities as a result of 
     such discharge is not taken into account for purposes of 
     section 752 at the time of the discharge to the extent the 
     deemed distribution under section 752 would cause the partner 
     to recognize gain under section 731. Thus, the deemed 
     distribution under section 752 is deferred with respect to a 
     partner to the extent it exceeds such partner's basis. 
     Amounts so deferred are taken into account at the same time, 
     and to the extent remaining in the same amount, as income 
     deferred under the provision is recognized by the partner.
       Coordination with section 108(a) and procedures for 
           election
       Where a taxpayer makes the election provided by the 
     provision, the exclusions provided by section 108(a)(1)(A), 
     (B), (C), and (D) shall not apply to the income from the 
     discharge of indebtedness for the year in which the taxpayer 
     makes the election or any subsequent year. Thus, for example, 
     an insolvent taxpayer may elect under the provision to defer 
     income from the discharge of indebtedness rather than 
     excluding such income and reducing tax attributes by a 
     corresponding amount. The election is to be made on an 
     instrument by instrument basis; once made, the election is 
     irrevocable. A taxpayer makes an election with respect to a 
     debt instrument by including with its return for the taxable 
     year in which the reacquisition of the debt instrument occurs 
     a statement that (1) clearly identifies the debt instrument 
     and (2) includes the amount of deferred income to which the 
     provision applies and such other information as may be 
     prescribed by the Secretary. The Secretary is authorized to 
     require reporting of the election (and other information with 
     respect to the reacquisition) for years subsequent to the 
     year of the reacquisition.
       Regulatory authority
       The provision authorizes the Secretary of the Treasury to 
     prescribe such regulations as may be necessary or appropriate 
     for purposes of applying the provision, including rules 
     extending the acceleration provisions to other circumstances 
     where appropriate, rules requiring reporting of the election 
     and such other information as the Secretary may require on 
     returns of tax for subsequent taxable years, rules for the 
     application of the

[[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\
---------------------------------------------------------------------------
     \96\ Sec. 163(e)(1). For purposes of section 163(e)(1), the 
     daily portion of the original issue discount for any day is 
     determined under section 1272(a) (without regard to paragraph 
     (7) thereof and without regard to section 1273(a)(3)).
     \97\ Sec. 163(e)(5).
---------------------------------------------------------------------------
       An AHYDO is any debt instrument if (1) the maturity date on 
     such instrument is more than five years from the date of 
     issue; (2) the yield to maturity on such instrument exceeds 
     the sum of (a) the applicable Federal rate in effect under 
     section 1274(d) for the calendar month in which the 
     obligation is issued and five percentage points, and (3) such 
     instrument has ``significant original issue discount.\98\ An 
     instrument is treated as having ``significant original issue 
     discount'' if the aggregate amount of interest that would be 
     includible in the gross income of the holder with respect to 
     such instrument for periods before the close of any accrual 
     period (as defined in section 1272(a)(5)) ending after the 
     date five years after the date of issue, exceeds the sum of 
     (1) the aggregate amount of interest to be paid under the 
     instrument before the close of such accrual period, and (2) 
     the product of the issue price of such instrument (as defined 
     in sections 1273(b) and 1274(a)) and its yield to 
     maturity.\99\
---------------------------------------------------------------------------
     \98\ Sec. 163(i)(1).
     \99\ Sec. 163(i)(2).
---------------------------------------------------------------------------
       The disqualified portion of the original issue discount on 
     an AHYDO is the lesser of (1) the amount of original issue 
     discount with respect to such obligation or (2) the portion 
     of the ``total return'' on such obligation which bears the 
     same ratio to such total return as the ``disqualified yield'' 
     (i.e., the excess of the yield to maturity on the obligation 
     over the applicable Federal rate plus six percentage points) 
     on such obligation bears to the yield to maturity on such 
     obligation.\100\ The term ``total return'' means the amount 
     which would have been the original issue discount of the 
     obligation if interest described in section 1273(a)(2) were 
     included in the 101 stated redemption to maturity.\101\ A 
     corporate holder treats the disqualified portion of original 
     issue discount as a stock distribution for purposes of the 
     dividend received deduction.\102\
---------------------------------------------------------------------------
     \100\ Sec. 163(e)(5)(C).
     \101\ Sec. 163(e)(5)(C)(ii).
     \102\ Sec. 163(e)(5)(B).
---------------------------------------------------------------------------


                               House Bill

       No provision.


                            Senate Amendment

       No provision.


                          Conference Agreement

       The conference agreement adds a provision that suspends the 
     rules in section 163(e)(5) for certain obligations issued in 
     a debt-for-debt exchange, including an exchange resulting 
     from a significant modification of a debt instrument, after 
     August 31, 2008, and before January 1, 2010.
       In general, the suspension does not apply to any newly 
     issued debt instrument (including any debt instrument issued 
     as a result of a significant modification of a debt 
     instrument) that is issued for an AHYDO. However, any newly 
     issued debt instrument (including any debt instrument issued 
     as a result of a significant modification of a debt 
     instrument) for which the AHYDO rules are suspended under the 
     provision is not treated as an AHYDO for purposes of a 
     subsequent application of the suspension rule. Thus, for 
     example, if a new debt instrument that would be an AHYDO 
     under present law is issued in exchange for a debt instrument 
     that is not an AHYDO, and the provision suspends application 
     of section 163(e)(5), another new debt instrument, issued 
     during the suspension period in exchange for the instrument 
     with respect to which the rule in section 163(e)(5) was 
     suspended, would be eligible for the relief provided by the 
     provision despite the fact that it is issued for an 
     instrument that is an AHYDO under present law.
       In addition, the suspension does not apply to any newly 
     issued debt instrument (including any debt instrument issued 
     as a result of a significant modification of a debt 
     instrument) that is (1) described in section 871(h)(4) 
     (without regard to subparagraph (D) thereof) (i.e., certain 
     contingent debt) or (2) issued to a person related to the 
     issuer (within the meaning of section 108(e)(4)).
       The provision provides authority to the Secretary to apply 
     the suspension rule to periods after December 31, 2009, where 
     the Secretary determines that such application is appropriate 
     in light of distressed conditions in the debt capital 
     markets. In addition, the provision grants authority to the 
     Secretary to use a rate that is higher than the applicable 
     Federal rate for purposes of applying section 163(e)(5) for 
     obligations issued after December 31, 2009, in taxable years 
     ending after such date if the Secretary determines that such 
     higher rate is appropriate in light of distressed conditions 
     in the debt capital markets.
       Effective date.--The temporary suspension of section 
     163(e)(5) applies to obligations issued after August 31, 
     2008, in taxable years ending after such date. The additional 
     authority granted to the Secretary to use a rate higher than 
     the applicable Federal rate for purposes of applying section 
     163(e)(5) applies to obligations issued after December 31, 
     2009, in taxable years ending after such date.
     10. Special rules applicable to qualified small business 
         stock for 2009 and 2010 (sec. 1241 of the Senate 
         amendment, sec. 1241 of the conference agreement, and 
         sec. 1202 of the Code)


                              Present Law

       Under present law, individuals may exclude 50 percent (60 
     percent for certain empowerment zone businesses) of the gain 
     from the sale of certain small business stock acquired at 
     original issue and held for at least five years.\103\ The 
     portion of the gain includible in taxable income is taxed at 
     a maximum rate of 28 percent under the regular tax.\104\ A 
     percentage of the excluded gain is an alternative minimum tax 
     preference,\105\ the portion of the gain includible in 
     alternative minimum taxable income is taxed at a maximum rate 
     of 28 percent under the alternative minimum tax.
---------------------------------------------------------------------------
     \103\ Sec. 1202.
     \104\ Sec. 1(h).
     \105\ Sec. 57(a)(7). In the case of qualified small business 
     stock, the percentage of gain excluded from gross income 
     which is an alternative minimum tax preference is (i) seven 
     percent in the case of stock disposed of in a taxable year 
     beginning before 2011; (ii) 42 percent in the case of stock 
     acquired before January 1, 2001, and disposed of in a taxable 
     year beginning after 2010; and (iii) 28 percent in the case 
     of stock acquired after December 31, 2000, and disposed of in 
     a taxable year beginning after 2010.
---------------------------------------------------------------------------
       Thus, under present law, gain from the sale of qualified 
     small business stock is taxed at effective rates of 14 
     percent under the regular tax \106\ and (i) 14.98 percent 
     under the alternative minimum tax for dispositions before 
     January 1, 2011; (ii) 19.98 percent under the alternative 
     minimum tax for dispositions after December 31, 2010, in the 
     case of stock acquired before January 1, 2001; and (iii) 
     17.92 percent under the alternative minimum tax for 
     dispositions after December 31, 2010, in the case of stock 
     acquired after December 31, 2006.\107\
---------------------------------------------------------------------------
     \106\ The 50 percent of gain included in taxable income is 
     taxed at a maximum rate of 28 percent.
     \107\ The amount of gain included in alternative minimum tax 
     is taxed at a maximum rate of 28 percent. The amount so 
     included is the sum of (i) 50 percent (the percentage 
     included in taxable income) of the total gain and (ii) the 
     applicable preference percentage of the one-half gain that is 
     excluded from taxable income.
---------------------------------------------------------------------------
       The amount of gain eligible for the exclusion by an 
     individual with respect to any corporation is the greater of 
     (1) ten times the taxpayer's basis in the stock or (2) $10 
     million. In order to qualify as a small business, when the 
     stock is issued, the gross assets of the corporation may not 
     exceed $50 million. The corporation also must meet certain 
     active trade or business requirements.


                               House Bill

       No provision.


                            Senate Amendment

       Under the Senate amendment, the percentage exclusion for 
     qualified small business stock sold by an individual is 
     increased from 50 percent (60 percent for certain empowerment 
     zone businesses) to 75 percent.
       As a result of the increased exclusion, gain from the sale 
     of qualified small business stock to which the provision 
     applies is taxed at effective rates of seven percent under 
     the regular tax \108\ and 12.88 percent under the alternative 
     minimum tax.\109\
---------------------------------------------------------------------------
     \108\ The 25 percent of gain included in taxable income is 
     taxed at a maximum rate of 28 percent.
     \109\ The 46 percent of gain included in alternative minimum 
     tax is taxed at a maximum rate of 28 percent. Forty-six 
     percent is the sum of 25 percent (the percentage of total 
     gain included in taxable income) plus 21 percent (the 
     percentage of total gain which is an alternative minimum tax 
     preference).
---------------------------------------------------------------------------
       Effective date.--The provision is effective for stock 
     issued after the date of enactment and before January 1, 
     2011.


                          Conference Agreement

       The conference agreement follows the Senate amendment.
     11. Temporary reduction in recognition period for S 
         corporation built-in gains tax (sec. 1261 of the Senate 
         amendment, sec. 1251 of the conference agreement, and 
         sec. 1374 of the Code)


                              Present Law

       A ``small business corporation'' (as defined in section 
     1361(b)) may elect to be treated as an S corporation. Unlike 
     C corporations, S corporations generally pay no corporate-
     level tax. Instead, items of income and loss of an S 
     corporation pass though to its shareholders. Each shareholder 
     takes into account separately its share of these items on its 
     individual income tax return.\110\
---------------------------------------------------------------------------
     \110\ Sec. 1366.
---------------------------------------------------------------------------
       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\
---------------------------------------------------------------------------
     \116\ Sec. 265(a).
     \117\ See Rev. Proc. 72-18, 1972-1 C.B. 740.
---------------------------------------------------------------------------
       Two-percent rule for individuals and certain nonfinancial 
           corporations
       In the absence of direct evidence linking an individual 
     taxpayer's indebtedness with the purchase or carrying of tax-
     exempt obligations, the Internal Revenue Service takes

[[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.
---------------------------------------------------------------------------
     \118\ Id.
---------------------------------------------------------------------------
       Similarly, in the case of a corporation that is not a 
     financial institution or a dealer in tax-exempt obligations, 
     where there is no direct evidence of a purpose to purchase or 
     carry tax-exempt obligations, the corporation's holdings of 
     tax-exempt obligations are presumed to be insubstantial if 
     the average adjusted basis of the corporation's tax-exempt 
     obligations is two percent or less of the average adjusted 
     basis of all assets held by the corporation in the active 
     conduct of its trade or business.
       Financial institutions
       In the case of a financial institution, the Code generally 
     disallows that portion of the taxpayer's interest expense 
     that is allocable to tax-exempt interest. \119\ The amount of 
     interest that is disallowed is an amount which bears the same 
     ratio to such interest expense as the taxpayer's average 
     adjusted bases of tax-exempt obligations acquired after 
     August 7, 1986, bears to the average adjusted bases for all 
     assets of the taxpayer.
---------------------------------------------------------------------------
     \119\ Sec. 265(b)(1). A ``financial institution'' is any 
     person that (1) accepts deposits from the public in the 
     ordinary course of such person's trade or business and is 
     subject to Federal or State supervision as a financial 
     institution or (2) is a corporation described in section 
     585(a)(2). Sec. 265(b)(5).
---------------------------------------------------------------------------
       Exception for certain obligations of qualified small 
           issuers
       The general rule in section 265(b), denying financial 
     institutions' interest expense deductions allocable to tax-
     exempt obligations, does not apply to ``qualified tax-exempt 
     obligations.'' \120\ Instead, as discussed in the next 
     section, only *percent of the interest expense allocable to 
     ``qualified tax-exempt obligations'' is disallowed. \121\ A 
     ``qualified tax-exempt obligation'' is a tax-exempt 
     obligation that (1) is issued after August 7, 1986, by a 
     qualified small issuer, (2) is not a private activity bond, 
     and (3) is designated by the issuer as qualifying for the 
     exception from the general rule of section 265(b).
---------------------------------------------------------------------------
     \120\ Sec. 265(b)(3).
     \121\ Secs. 265(b)(3)(A), 291(a)(3) and 291(e)(1).
---------------------------------------------------------------------------
       A ``qualified small issuer'' is an issuer that reasonably 
     anticipates that the amount of tax-exempt obligations that it 
     will issue during the calendar year will be $10 million or 
     less. \122\ The Code specifies the circumstances under which 
     an issuer and all subordinate entities are aggregated. \123\ 
     For purposes of the $10 million limitation, an issuer and all 
     entities that issue obligations on behalf of such issuer are 
     treated as one issuer. All obligations issued by a 
     subordinate entity are treated as being issued by the entity 
     to which it is subordinate. An entity formed (or availed of) 
     to avoid the $10 million limitation and all entities 
     benefiting from the device are treated as one issuer.
---------------------------------------------------------------------------
     \122\ Sec. 265(b)(3)(C).
     \123\ Sec. 265(b)(3)(E).
---------------------------------------------------------------------------
       Composite issues (i.e., combined issues of bonds for 
     different entities) qualify for the ``qualified tax-exempt 
     obligation'' exception only if the requirements of the 
     exception are met with respect to (1) the composite issue as 
     a whole (determined by treating the composite issue as a 
     single issue) and (2) each separate lot of obligations that 
     is part of the issue (determined by treating each separate 
     lot of obligations as a separate issue). \124\ Thus a 
     composite issue may qualify for the exception only if the 
     composite issue itself does not exceed $10 million, and if 
     each issuer benefitting from the composite issue reasonably 
     anticipates that it will not issue more than $10 million of 
     tax-exempt obligations during the calendar year, including 
     through the composite arrangement.
---------------------------------------------------------------------------
     \124\ Sec. 265(b)(3)(F).
---------------------------------------------------------------------------
       Treatment of financial institution preference items
       Section 291(a)(3) reduces by 20 percent the amount 
     allowable as a deduction with respect to any financial 
     institution preference item. Financial institution preference 
     items include interest on debt to tax-exempt obligations 
     acquired after December 31, 1982, and before acquired on 
     August 7, 1986. \125\ Section 265(b)(3) treats qualified tax-
     exempt obligations as if they were acquired on August 7, 
     1986. As a result, the amount allowable as a deduction by a 
     financial institution with respect to interest incurred to 
     carry a qualified tax-exempt obligation is reduced by 20 
     percent.
---------------------------------------------------------------------------
     \125\ Sec. 291(e)(1).
---------------------------------------------------------------------------


                               House Bill

       Two-percent safe harbor for financial institutions
       The provision provides that tax-exempt obligations issued 
     during 2009 or 2010 and held by a financial institution, in 
     an amount not to exceed two percent of the adjusted basis of 
     the financial institution's assets, are not taken into 
     account for the purpose of determining the portion of the 
     financial institution's interest expense subject to the pro 
     rata interest disallowance rule of section 265(b). For 
     purposes of this rule, a refunding bond (whether a current or 
     advance refunding) is treated as issued on the date of the 
     issuance of the refunded bond (or in the case of a series of 
     refundings, the original bond).
       The provision also amends section 291(e) to provide that 
     tax-exempt obligations issued during 2009 and 2010, and not 
     taken into account for purposes of the calculation of a 
     financial institution's interest expense subject to the pro 
     rata interest disallowance rule, are treated as having been 
     acquired on August 7, 1986. As a result, such obligations are 
     financial institution preference items, and the amount 
     allowable as a deduction by a financial institution with 
     respect to interest incurred to carry such obligations is 
     reduced by 20 percent.
       Modifications to qualified small issuer exception
       With respect to tax-exempt obligations issued during 2009 
     and 2010, the provision increases from $10 million to $30 
     million the annual limit for qualified small issuers.
       In addition, in the case of ``qualified financing issue'' 
     issued in 2009 or 2010, the provision applies the $30 million 
     annual volume limitation at the borrower level (rather than 
     at the level of the pooled financing issuer). Thus, for the 
     purpose of applying the requirements of the section 265(b)(3) 
     qualified small issuer exception, the portion of the proceeds 
     of a qualified financing issue that are loaned to a 
     ``qualified borrower'' that participates in the issue are 
     treated as a separate issue with respect to which the 
     qualified borrower is deemed to be the issuer.
       A ``qualified financing issue'' is any composite, pooled or 
     other conduit financing issue the proceeds of which are used 
     directly or indirectly to make or finance loans to one or 
     more ultimate borrowers all of whom are qualified borrowers. 
     A ``qualified borrower'' means (1) a State or political 
     subdivision of a State or (2) an organization described in 
     section 501(c)(3) and exempt from tax under section 501(a). 
     Thus, for example, a $100 million pooled financing issue that 
     was issued in 2009 could qualify for the section 265(b)(3) 
     exception if the proceeds of such issue were used to make 
     four equal loans of $25 million to four qualified borrowers. 
     However, if (1) more than $30 million were loaned to any 
     qualified borrower, (2) any borrower were not a qualified 
     borrower, or (3) any borrower would, if it were the issuer of 
     a separate issue in an amount equal to the amount loaned to 
     such borrower, fail to meet any of the other requirements of 
     section 265(b)(3), the entire $100 million pooled financing 
     issue would fail to qualify for the exception.
       For purposes of determining whether an issuer meets the 
     requirements of the small issuer exception, qualified 
     501(c)(3) bonds issued in 2009 or 2010 are treated as if they 
     were issued by the 501(c)(3) organization for whose benefit 
     they were issued (and not by the actual issuer of such 
     bonds). In addition, in the case of an organization described 
     in section 501(c)(3) and exempt from taxation under section 
     501(a), requirements for ``qualified financing issues'' shall 
     be applied as if the section 501(c)(3) organization were the 
     issuer. Thus, in any event, an organization described in 
     section 501(c)(3) and exempt from taxation under section 
     501(a) shall be limited to the $30 million per issuer cap for 
     qualified tax exempt obligations described in section 
     265(b)(3).
       Effective Date.--The provisions are effective for 
     obligations issued after December 31, 2008.


                            Senate Amendment

       The Senate amendment is the same as the House bill.


                          Conference Agreement

       The conference agreement follows the House bill and the 
     Senate amendment.
     2. Temporary modification of alternative minimum tax 
         limitations on tax-exempt bonds (sec. 1503 of the House 
         bill, sec. 1503 of the Senate amendment, sec. 1503 of the 
         conference agreement, and secs. 56 and 57 of the Code)


                              Present Law

       Present law imposes an alternative minimum tax (``AMT'') on 
     individuals and corporations. AMT is the amount by which the 
     tentative minimum tax exceeds the regular income tax. The 
     tentative minimum tax is computed based upon a taxpayer's 
     alternative minimum taxable income (``AMTI''). AMTI is the 
     taxpayer's taxable income modified to take into account 
     certain preferences and adjustments. One of the preference 
     items 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\
---------------------------------------------------------------------------
     \126\ The 25 percent restriction was enacted by the Technical 
     and Miscellaneous Tax Act of 1988 because of concern over the 
     scope of the definition of manufacturing facility. See H.R. 
     Rpt. No. 100-795 (1988). The amendment was intended to 
     clarify that while the manufacturing facility definition does 
     not preclude the financing of ancillary activities, the 25 
     percent restriction was intended to limit the use of bond 
     proceeds to finance facilities other than for ``core 
     manufacturing.'' The conference agreement followed the House 
     bill, which the conference report described as follows: ``The 
     House bill clarifies that up to 25 percent of the proceeds of 
     a qualified small issue may be used to finance ancillary 
     activities which are carried out at the manufacturing site. 
     All such ancillary activities must be subordinate and 
     integral to the manufacturing process.''
---------------------------------------------------------------------------


                               House Bill

       No provision.


                            Senate Amendment

     In general
       For bonds issued after the date of enactment and before 
     January 1, 2011, the provision expands the definition of 
     manufacturing facilities to mean any facility that is used in 
     the manufacturing, creation, or production of tangible 
     property or intangible property (within the meaning of 
     section 197(d)(1)(C)(iii)). For this purpose, intangible 
     property means any patent, copyright, formula, process, 
     design, knowhow, format, or other similar item. It is 
     intended to include among other items, the creation of 
     computer software, and intellectual property associated bio-
     tech and pharmaceuticals.
       In lieu of the directly related and ancillary test of 
     present law, the provision provides a special rule for bonds 
     issued after the date of enactment and before January 1, 
     2011. For these bonds, the provision provides that facilities 
     that are functionally related and subordinate to the 
     manufacturing facility are treated as a manufacturing 
     facility and the 25 percent of net proceeds restriction does 
     not apply to such facilities.\127\ Functionally related and 
     subordinate facilities must be located on the same site as 
     the manufacturing facility.
---------------------------------------------------------------------------
     \127\ The provision is based in part on a similar rule 
     applicable to exempt facility bonds. Treas. Reg. sec. 1.103-
     8(a)(3) provides: ``(3) Functionally related and subordinate. 
     An exempt facility includes any land, building, or other 
     property functionally related and subordinate to such 
     facility. Property is not functionally related and 
     subordinate to a facility if it is not of a character and 
     size commensurate with the character and size of such 
     facility.''
---------------------------------------------------------------------------
     Effective date
       The provision is effective for bonds issued after the date 
     of enactment and before January 1, 2011.


                          Conference Agreement

       The conference agreement follows the Senate amendment.
     4. Qualified school construction bonds (sec. 1511 of the 
         House bill, sec. 1521 of the Senate amendment, sec. 1521 
         of the conference agreement, and new sec. 54F of the 
         Code)


                              Present Law

     Tax-exempt bonds
       Interest on State and local governmental bonds generally is 
     excluded from gross income for Federal income tax purposes if 
     the proceeds of the bonds are used to finance direct 
     activities of these governmental units or if the bonds are 
     repaid with revenues of the governmental units. These can 
     include tax-exempt bonds which finance public schools.\128\ 
     An issuer must file with the Internal Revenue Service certain 
     information about the bonds issued in order for that bond 
     issue to be tax-exempt.\129\ Generally, this information 
     return is required to be filed no later than the 15th day of 
     the second month after the close of the calendar quarter in 
     which the bonds were issued.
---------------------------------------------------------------------------
     \128\ Sec. 103.
     \129\ Sec. 149(e).
---------------------------------------------------------------------------
       The tax exemption for State and local bonds does not apply 
     to any arbitrage bond.\130\ An arbitrage bond is defined as 
     any bond that is part of an issue if any proceeds of the 
     issue are reasonably expected to be used (or intentionally 
     are used) to acquire higher-yielding investments or to 
     replace funds that are used to acquire higher yielding 
     investments.\131\ In general, arbitrage profits may be earned 
     only during specified periods (e.g., defined ``temporary 
     periods'') before funds are needed for the purpose of the 
     borrowing or on specified types of investments (e.g., 
     ``reasonably required reserve or replacement funds''). 
     Subject to limited exceptions, investment profits that are 
     earned during these periods or on such investments must be 
     rebated to the Federal Government.
---------------------------------------------------------------------------
     \130\ Sec. 103(a) and (b)(2).
     \131\ Sec. 148.
---------------------------------------------------------------------------
     Qualified zone academy bonds
       As an alternative to traditional tax-exempt bonds, State nd 
     local governments were given the authority to issue 
     ``qualified zone academy bonds.'' \132\ A total of $400 
     million of qualified zone academy bonds is authorized to be 
     issued annually in calendar years 1998 through 2009. The $400 
     million aggregate bond cap is allocated each year to the 
     States according to their respective populations of 
     individuals below the poverty line. Each State, in turn, 
     allocates the credit authority to qualified zone academies 
     within such State.
---------------------------------------------------------------------------
     \132\ Sec. 1397E.
---------------------------------------------------------------------------
       A taxpayer holding a qualified zone academy bond on the 
     credit allowance date is entitled to a credit. The credit is 
     includible in gross income (as if it were a taxable interest 
     payment on the bond), and may be claimed against regular 
     income tax and alternative minimum tax liability.
       The Treasury Department sets the credit rate at a rate 
     estimated to allow issuance of qualified zone academy bonds 
     without discount and without interest cost to the 
     issuer.\133\ The Secretary determines credit rates for tax 
     credit bonds based on general assumptions about credit 
     quality of the class of potential eligible issuers and such 
     other factors as the Secretary deems appropriate. The 
     Secretary may determine credit rates based on general credit 
     market yield indexes and credit ratings. The maximum term of 
     the bond is determined by the Treasury Department, so that 
     the present value of the obligation to repay the principal on 
     the bond is 50 percent of the face value of the bond.
---------------------------------------------------------------------------
     \133\ Given the differences in credit quality and other 
     characteristics of individual issuers, the Secretary cannot 
     set credit rates in a manner that will allow each issuer to 
     issue tax credit bonds at par.
---------------------------------------------------------------------------
       ``Qualified zone academy bonds'' are defined as any bond 
     issued by a State or local government, provided that (1) at 
     least 95 percent of the proceeds are used for the purpose of 
     renovating, providing equipment to, developing course 
     materials for use at, or training teachers and other school 
     personnel in a ``qualified zone academy'' and (2) private 
     entities have promised to contribute to the qualified zone 
     academy certain equipment, technical assistance or training, 
     employee services, or other property or services with a value 
     equal to at least 10 percent of the bond proceeds.
       A school is a ``qualified zone academy'' if (1) the school 
     is a public school that provides education and training below 
     the college level, (2) the school operates a special academic 
     program in cooperation with businesses to enhance the 
     academic curriculum and increase graduation and employment


[[Continued on page H1460]]