,i #aacth ,,congress #ast ,session ,h4 ,r4 #eje ,,in ,,the ,,house ,,of ,,representatives ,february #e1 #bjac ,mr4 ,ellison 7for himself1 ,mr4 ,grijalva1 ,mr4 ,conyers1 ,mr4 ,mc,dermott1 ,ms4 ,clarke1 ,mr4 ,nadler1 ,ms4 ,lee of ,california1 ,mr4 ,markey1 ,ms4 ,schakowsky1 ,ms4 ,chu1 ,mr4 ,cohen1 ,mr4 ,clay1 ,ms4 ,eddie ,bernice ,johnson of ,texas1 ,mr4 ,grayson1 and ,mr4 ,gutierrez7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means1 and in addition to the ,committees on the ,budget1 ,oversight and ,government ,reform1 ,armed ,services1 ,education and the ,workforce1 ,transportation and ,infrastructure1 and ,financial ,services1 for a period to be subsequently determined by the ,speaker1 in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned ,a ,,bill ,to repeal sequester while achieving balance in deficit reduction between revenue and cuts1 and between non-defense cuts and defense cuts1 to invest in job creation1 and for other purposes4 #a4 ,short title2 table of contents 7a7 ,short ,title ,this ,act may be cited as the ,balancing ,act4 7b7 ,table of contents ,the table of contents for this ,act is as follows3 ,sec4 #a4 ,short title2 table of contents4 ,title ,i--,repeal ,sequester ,sec4 #aja4 ,repeal of section #bea;,a sequestration to enforce budget goal4 ,title ,,ii--,close ,tax ,loopholes to ,achieve ,balance ,subtitle ,a--#bh ,percent ,limitation on ,certain ,deductions and ,exclusions ,sec4 #bja4 #bh percent limitation on certain deductions and exclusions4 ,subtitle ,b--,tax carried interest in investment partnerships as ordinary income ,sec4 #baa4 ,partnership interests transferred in connection with performance of services4 ,sec4 #bab4 ,special rules for partners providing investment management services to partnerships4 ,subtitle ,c--,dual capacity taxpayers ,sec4 #bba4 ,modifications of foreign tax credit rules applicable to dual capacity taxpayers4 ,sec4 #bbb4 ,separate basket treatment taxes paid on foreign oil and gas income4 ,subtitle ,d--,close ,exclusion of ,foreign-,earned ,income ,loophole ,sec4 #bca4 ,repeal of foreign earned income exclusion4 ,subtitle ,e--,close ,s ,corporation ,loophole ,sec4 #bda4 ,employment tax treatment of professional service businesses4 ,subtitle ,f--,limitation on ,mortgage ,interest ,deduction ,with ,respect to ,boats ,sec4 #bea4 ,mortgage interest deduction allowed with respect to boats only if boat is used as the principal residence of the taxpayer4 ,title ,,iii--,ending ,corporate ,subsidies ,subtitle ,a--,end ,fossil ,fuel ,subsidies ,sec4 #cja4 ,termination of various tax expenditures relating to fossil fuels4 ,sec4 #cjb4 ,termination of alternative fuel vehicle refueling property credit with respect to fossil fuels4 ,sec4 #cjc4 ,uniform seven-year amortization for geological and geophysical expenditures4 ,sec4 #cjd4 ,repeal of domestic manufacturing deduction for hard mineral mining4 ,sec4 #cje4 ,limitation on deduction for income attributable to domestic production of oil1 natural gas1 or primary products thereof4 ,sec4 #cjf4 ,termination of last-in1 first-out method of inventory for oil1 natural gas1 and coal companies4 ,sec4 #cjg4 ,repeal of percentage depletion for coal and hard mineral fossil fuels4 ,sec4 #cjh4 ,termination of capital gains treatment for royalties from coal4 ,sec4 #cji4 ,increase in oil spill liability trust fund financing rate4 ,sec4 #caj4 ,denial of deduction for removal costs and damages for certain oil spills4 ,sec4 #caa4 ,tax on crude oil and natural gas produced from the outer ,continental ,shelf in the ,gulf of ,mexico4 ,subtitle ,b--,ending ,excessive ,corporate ,tax ,deductions for ,stock ,options ,sec4 #cca4 ,consistent treatment of stock options by corporations4 ,sec4 #ccb4 ,application of executive pay deduction limit4 ,subtitle ,c--,reduce ,deduction of ,corporate ,meals and ,entertainment ,sec4 #cda4 ,reduction in business meals and entertainment tax deduction4 ,title ,,iv--,close ,international ,tax ,system ,loopholes ,subtitle ,a--,reformation of ,u4,s4 international tax system ,sec4 #dja4 ,allocation of expenses and taxes on basis of repatriation of foreign income4 ,sec4 #djb4 ,excess income from transfers of intangibles to low-taxed affiliates treated as subpart ,f income4 ,sec4 #djc4 ,limitations on income shifting through intangible property transfers4 ,sec4 #djd4 ,limitation on earnings stripping by expatriated entities4 ,sec4 #dje4 ,prevention of avoidance of tax through reinsurance with non-taxed affiliates4 ,subtitle ,b--,reinsurance ,sec4 #daa4 ,prevention of avoidance of tax through reinsurance with non-taxed affiliates4 ,subtitle ,c--,close loophole for corporate jet depreciation ,sec4 #dba4 ,general aviation aircraft treated as #g-year property4 ,title ,v--,close ,estate ,tax ,loopholes ,sec4 #eja4 ,valuation rules for certain transfers of nonbusiness assets2 limitation on minority discounts4 ,sec4 #ejb4 ,consistent basis reporting between estate and person acquiring property from decedent4 ,sec4 #ejc4 ,required minimum #aj-year term1 etc41 for grantor retained annuity trusts4 ,sec4 #ejd4 ,limitation on ,,gst exemption of perpetual dynasty trusts4 ,title ,,vi--,cut ,pentagon ,waste to ,achieve ,balance ,subtitle ,a--,smarter ,approach to nuclear ,expenditures ,sec4 #fja4 ,short title4 ,sec4 #fjb4 ,findings4 ,sec4 #fjc4 ,reduction in nuclear forces4 ,sec4 #fjd4 ,reports required4 ,subtitle ,b--,limiting ,excessive ,contractor ,compensation ,sec4 #faa4 ,limitation on allowable compensation costs4 ,subtitle ,c--,relocate ,troops ,from ,europe to the ,united ,states ,sec4 #fae4 ,relocation to ,united ,states military installations of members of the ,united ,states ,armed ,forces assigned to permanent duty in ,europe4 ,subtitle ,d--,additional reduction in armed forces end strength levels ,sec4 #fba4 ,additional ,army and ,marine ,corps end strength reductions through retirement and separation4 ,subtitle ,e--,procurement of certain submarines1 carriers1 and aircraft ,sec4 #fca4 ,limitation on procurement of ,virginia class submarines4 ,sec4 #fcb4 ,limitation on procurement of one ,ford class aircraft carrier4 ,sec4 #fcc4 ,authority for procurement of ,f_/,a-#ah;,e and ,f_/,a-#ah;,f aircraft4 ,sec4 #fcd4 ,prohibition on procurement of ,v-#bb ,osprey aircraft4 ,subtitle ,f--,limit ,military ,bands ,sec4 #fda4 ,limitation on expenditures for military musical units4 ,subtitle ,g--,reduction in ,number of ,general and ,flag ,officers ,sec4 #fea4 ,return of maximum number of general and flag officers to ,cold ,war levels4 ,subtitle ,h--,audit the ,pentagon ,sec4 #ffa4 ,purposes4 ,sec4 #ffb4 ,findings4 ,sec4 #ffc4 ,spending reductions for agencies without clean audits4 ,sec4 #ffd4 ,report on ,department of ,defense reporting requirements4 ,sec4 #ffe4 ,sense of ,congress in implementation of defense budget reductions4 ,title ,,vii--,invest in ,job ,creation ,subtitle ,a--,making ,work ,pay ,extension ,sec4 #gja4 ,one-year extension of making work pay credit4 ,subtitle ,b--,support for ,teachers and ,school ,modernization ,part ,i--,preventing teacher layoffs and supporting the creation of additional jobs in public early childhood1 elementary1 and secondary education ,sec4 #gaa4 ,purpose4 ,sec4 #gab4 ,grants for the outlying areas and the ,secretary of the ,interior2 availability of funds4 ,sec4 #gac4 ,state allocation4 ,sec4 #gad4 ,state application4 ,sec4 #gae4 ,state reservation and responsibilities4 ,sec4 #gaf4 ,local educational agencies4 ,sec4 #gag4 ,early learning4 ,sec4 #gah4 ,maintenance of effort4 ,sec4 #gai4 ,reporting4 ,sec4 #gbj4 ,definitions4 ,sec4 #gba4 ,authorization of appropriations4 ,part ,,ii--,elementary and secondary schools ,sec4 #gca4 ,purpose4 ,sec4 #gcb4 ,authorization of appropriations4 ,sec4 #gcc4 ,allocation of funds4 ,sec4 #gcd4 ,state use of funds4 ,sec4 #gce4 ,state and local applications4 ,sec4 #gcf4 ,use of funds4 ,sec4 #gcg4 ,private schools4 ,sec4 #gch4 ,additional provisions4 ,part ,,iii--,community ,college modernization ,sec4 #gci4 ,federal assistance for community college modernization4 ,part ,,iv--,general provisions ,sec4 #gdj4 ,definitions4 ,sec4 #gda4 ,buy ,american4 ,subtitle ,c--,transportation ,infrastructure ,investments ,part ,i--,immediate transportation infrastructure investments ,sec4 #gea4 ,immediate transportation infrastructure investments4 ,part ,,ii--,building and upgrading infrastructure for long-,term development ,subpart ,a--,immediate transportation infrastructure investments ,sec4 #gfa4 ,short title4 ,sec4 #gfb4 ,findings and purpose4 ,sec4 #gfc4 ,definitions4 ,subpart ,b--,american ,infrastructure ,financing ,authority ,sec4 #gfe4 ,establishment and general authority of ,,aifa4 ,sec4 #gff4 ,voting members of the ,board of ,directors4 ,sec4 #gfg4 ,chief executive officer of ,,aifa4 ,sec4 #gfh4 ,powers and duties of the ,board of ,directors4 ,sec4 #gfi4 ,senior management4 ,sec4 #ggj4 ,special ,inspector ,general for ,,aifa4 ,sec4 #gga4 ,other personnel4 ,sec4 #ggb4 ,compliance4 ,subpart ,c--,terms and limitations on direct loans and loan guarantees ,sec4 #ggc4 ,eligibility criteria for assistance from ,,aifa and terms and limitations of loans4 ,sec4 #ggd4 ,loan terms and repayment4 ,sec4 #gge4 ,compliance and enforcement4 ,sec4 #ggf4 ,audits2 reports to the ,president and ,congress4 ,subpart ,d--,funding of ,,aifa ,sec4 #ggg4 ,administrative fees4 ,sec4 #ggh4 ,efficiency of ,,aifa4 ,sec4 #ggi4 ,funding4 ,subpart ,e--,extension of exemption from alternative minimum tax treatment for certain tax-,exempt bonds ,sec4 #ghj4 ,extension of exemption from alternative minimum tax treatment for certain tax-exempt bonds4 ,i ,repeal ,sequester #aja4 ,repeal of section #bea;,a sequestration to enforce budget goal ,section #bea;,a of the ,balanced ,budget and ,emergency ,deficit ,control ,act of #aihe is repealed4 ,,ii ,close ,tax ,loopholes to ,achieve ,balance ,a #bh ,percent ,limitation on ,certain ,deductions and ,exclusions #bja4 #bh percent limitation on certain deductions and exclusions 7a7 ,in general ,part ,i of subchapter ,b of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #fi4 ,limitation on certain deductions and exclusions 7a7 ,in general ,in the case of an individual for any taxable year1 if-- 7#a7 the taxpayer's adjusted gross income is above-- 7,a7 #bej1jjj in the case of a joint return within the meaning of section #fjac1 7,b7 #bbe1jjj in the case of a head of household return1 7,c7 #abe1jjj in the case of a married filing separately return1 or 7,d7 #bjj1jjj in all other cases2 and 7#b7 the taxpayer's adjusted taxable income for such taxable year exceeds the minimum marginal rate amount1 then the tax imposed under section #a with respect to such taxpayer for such taxable year shall be increased by the amount determined under subsection 7b74 ,if the taxpayer is subject to tax under section #ee1 then in lieu of an increase in tax under section #a1 the tax imposed under section #ee with respect to such taxpayer for such taxable year shall be increased by the amount determined under subsection 7c74 7b7 ,additional amount ,the amount determined under this subsection with respect to any taxpayer for any taxable year is the excess 7if any7 of-- 7#a7 the tax which would be imposed under section #a with respect to such taxpayer for such taxable year if adjusted taxable income were substituted for taxable income each place it appears therein1 over 7#b7 the sum of-- 7,a7 the tax which would be imposed under such section with respect to such taxpayer for such taxable year on the greater of-- 7i7 taxable income1 or 7ii7 the minimum marginal rate amount1 plus 7,b7 #bh percent of the excess 7if any7 of the taxpayer's adjusted taxable income over the greater of-- 7i7 the taxpayer's taxable income1 or 7ii7 the minimum marginal rate amount4 7c7 ,additional ,,amt amount 7#a7 ,the amount determined under this subsection with respect to any taxpayer for any taxable year is the additional amount computed under subsection 7b7 multiplied by the ratio that-- 7,a7 the result of-- 7i7 all itemized deductions 7before the application of section #fh71 plus 7ii7 the specified above-the-line deductions and specified exclusions1 minus 7iii7 the amount of deductions disallowed under section #ef7;b77#a77;,a7 and 7,b71 minus 7iv7 the non-preference disallowed deductions1 bears to-- 7,b7 the sum of-- 7i7 the total of itemized deductions 7after the application of section #fh71 plus 7ii7 the specified above-the-line deductions and specified exclusions4 7#b7 ,if the top of the ,,amt exemption phase-out range for the taxpayer exceeds the minimum marginal rate amount for the taxpayer and if the taxpayer's alternative minimum taxable income does not exceed the top of the ,,amt exemption phase-out range1 the taxpayer must increase its additional ,,amt amount by #g percent of the excess of-- 7,a7 the lesser of-- 7i7 the top of the ,,amt exemption phase-out range1 or 7ii7 the taxpayer's alternative minimum taxable income1 computed-- 7,i7 without regard to any itemized deduction or any specified above-the-line deduction1 and 7,,ii7 by including the amount of any specified exclusion2 over 7,b7 the greater of-- 7i7 the taxpayer's alternative minimum taxable income1 or 7ii7 the minimum marginal rate amount4 7d7 ,minimum marginal rate amount ,for purposes of this section1 the term minimum marginal rate amount means1 with respect to any taxpayer for any taxable year1 the highest amount of the taxpayer's taxable income which would be subject to a marginal rate of tax under section #a that is less than #cf percent with respect to such taxable year4 7e7 ,adjusted taxable income ,for purposes of this section-- 7#a7 ,in general ,the term adjusted taxable income means taxable income computed-- 7,a7 without regard to any itemized deduction or any specified above-the-line deduction1 and 7,b7 by including in gross income any specified exclusion4 7#b7 ,specified above-the-line deduction ,the term specified above-the-line deduction means-- 7,a7 the deduction provided under section #afb7l7 7relating to special rules for health insurance costs of self-employed individuals71 7,b7 the deduction provided under section #aii 7relating to income attributable to domestic production activities71 and 7,c7 the deductions provided under the following paragraphs of section #fb7;a73 7i7 ,paragraph 7#b7 7relating to certain trade and business deductions of employees71 other than subparagraph 7,a7 thereof4 7ii7 ,paragraph 7#ae7 7relating to moving expenses74 7iii7 ,paragraph 7#af7 7relating to ,archer ,m,s,as74 7iv7 ,paragraph 7#ag7 7relating to interest on education loans74 7v7 ,paragraph 7#ah7 7relating to higher education expenses74 7vi7 ,paragraph 7#ai7 7relating to health savings accounts74 7#c7 ,specified exclusion ,the term specified exclusion means-- 7,a7 any interest excluded under section #ajc1 7,b7 any exclusion with respect to the cost described in section #fjea7;a77#ad7 7without regard to subparagraph 7,b7 thereof71 and 7,c7 any foreign earned income excluded under section #iaa4 7f7 ,non-,preference disallowed deductions ,for purposes of this section1 the term ,,amt-allowed deductions means all itemized deductions disallowed by section #fh multiplied by the ratio that-- 7#a7 a taxpayer's itemized deductions for the taxable year that are subject to section #fh 7that is1 not including those excluded under section #fh7;c77 and that are not limited under section #ef7;b77#a77;,a7 or 7,b71 bears to 7#b7 the taxpayer's itemized deductions for the taxable year that are subject to section #fh 7that is1 not including those excluded under section #fh7;c774 7g7 ,regulations ,the ,secretary shall prescribe such regulations as may be appropriate to carry out this section1 including regulations which provide appropriate adjustments to the additional ,,amt amount4 4 7b7 ,effective date ,the amendments made by this section shall apply to taxable years beginning on or after ,january #a1 #bjac4 ,b ,tax carried interest in investment partnerships as ordinary income #baa4 ,partnership interests transferred in connection with performance of services 7a7 ,modification to election ,to include partnership interest in gross income in year of transfer ,subsection 7c7 of section #hc of the ,internal ,revenue ,code of #aihf is amended by redesignating paragraph 7#d7 as paragraph 7#e7 and by inserting after paragraph 7#c7 the following new paragraph3 7#d7 ,partnership interests ,except as provided by the ,secretary-- 7,a7 ,in general ,in the case of any transfer of an interest in a partnership in connection with the provision of services to 7or for the benefit of7 such partnership-- 7i7 the fair market value of such interest shall be treated for purposes of this section as being equal to the amount of the distribution which the partner would receive if the partnership sold 7at the time of the transfer7 all of its assets at fair market value and distributed the proceeds of such sale 7reduced by the liabilities of the partnership7 to its partners in liquidation of the partnership1 and 7ii7 the person receiving such interest shall be treated as having made the election under subsection 7b77#a7 unless such person makes an election under this paragraph to have such subsection not apply4 7,b7 ,election ,the election under subparagraph 7,a77ii7 shall be made under rules similar to the rules of subsection 7b77#b74 4 7b7 ,effective date ,the amendments made by this section shall apply to interests in partnerships transferred after ,december #ca1 #bjab4 #bab4 ,special rules for partners providing investment management services to partnerships 7a7 ,in general ,part ,i of subchapter ,k of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #gaj4 ,special rules for partners providing investment management services to partnerships 7a7 ,treatment of distributive share of partnership items ,for purposes of this title1 in the case of an investment services partnership interest-- 7#a7 ,in general ,notwithstanding section #gjb7;b7-- 7,a7 an amount equal to the net capital gain with respect to such interest for any partnership taxable year shall be treated as ordinary income1 and 7,b7 subject to the limitation of paragraph 7#b71 an amount equal to the net capital loss with respect to such interest for any partnership taxable year shall be treated as an ordinary loss4 7#b7 ,recharacterization of losses limited to recharacterized gains ,the amount treated as ordinary loss under paragraph 7#a77;,b7 for any taxable year shall not exceed the excess 7if any7 of-- 7,a7 the aggregate amount treated as ordinary income under paragraph 7#a77;,a7 with respect to the investment services partnership interest for all preceding partnership taxable years to which this section applies1 over 7,b7 the aggregate amount treated as ordinary loss under paragraph 7#a77;,b7 with respect to such interest for all preceding partnership taxable years to which this section applies4 7#c7 ,allocation to items of gain and loss 7,a7 ,net capital gain ,the amount treated as ordinary income under paragraph 7#a77;,a7 shall be allocated ratably among the items of long-term capital gain taken into account in determining such net capital gain4 7,b7 ,net capital loss ,the amount treated as ordinary loss under paragraph 7#a77;,b7 shall be allocated ratably among the items of long-term capital loss and short-term capital loss taken into account in determining such net capital loss4 7#d7 ,terms relating to capital gains and losses ,for purposes of this section-- 7,a7 ,in general ,net capital gain1 long-term capital gain1 and long-term capital loss1 with respect to any investment services partnership interest for any taxable year1 shall be determined under section #abbb1 except that such section shall be applied-- 7i7 without regard to the recharacterization of any item as ordinary income or ordinary loss under this section1 7ii7 by only taking into account items of gain and loss taken into account by the holder of such interest under section #gjb with respect to such interest for such taxable year1 7iii7 by treating property which is taken into account in determining gains and losses to which section #abca applies as capital assets held for more than #a year1 and 7iv7 without regard to section #abjb4 7,b7 ,net capital loss ,the term net capital loss means the excess of the losses from sales or exchanges of capital assets over the gains from such sales or exchanges4 ,rules similar to the rules of clauses 7i7 through 7iv7 of subparagraph 7,a7 shall apply for purposes of the preceding sentence4 7#e7 ,special rules for dividends 7,a7 ,individuals ,any dividend allocated to any investment services partnership interest shall not be treated as qualified dividend income for purposes of section #a7;h74 7,b7 ,corporations ,no deduction shall be allowed under section #bdc or #bde with respect to any dividend allocated to any investment services partnership interest4 7b7 ,dispositions of partnership interests 7#a7 ,gain 7,a7 ,in general ,any gain on the disposition of an investment services partnership interest shall be-- 7i7 treated as ordinary income1 and 7ii7 recognized notwithstanding any other provision of this subtitle4 7,b7 ,exceptions2 ,certain transfers to charities and related persons ,subparagraph 7,a7 shall not apply to-- 7i7 a disposition by gift1 7ii7 a transfer at death1 or 7iii7 other disposition identified by the ,secretary as a disposition with respect to which it would be inconsistent with the purposes of this section to apply subparagraph 7,a71 if such gift1 transfer1 or other disposition is to an organization described in section #agj7;b77#a77;,a7 7other than any organization described in section #eji7;a77#c7 or any fund or account described in section #diff7;d77#b77 or a person with respect to whom the transferred interest is an investment services partnership interest4 7#b7 ,loss ,any loss on the disposition of an investment services partnership interest shall be treated as an ordinary loss to the extent of the excess 7if any7 of-- 7,a7 the aggregate amount treated as ordinary income under subsection 7a7 with respect to such interest for all partnership taxable years to which this section applies1 over 7,b7 the aggregate amount treated as ordinary loss under subsection 7a7 with respect to such interest for all partnership taxable years to which this section applies4 7#c7 ,election with respect to certain exchanges ,paragraph 7#a77;,a77ii7 shall not apply to the contribution of an investment services partnership interest to a partnership in exchange for an interest in such partnership if-- 7,a7 the taxpayer makes an irrevocable election to treat the partnership interest received in the exchange as an investment services partnership interest1 and 7,b7 the taxpayer agrees to comply with such reporting and recordkeeping requirements as the ,secretary may prescribe4 7#d7 ,distributions of partnership property 7,a7 ,in general ,in the case of any distribution of property by a partnership with respect to any investment services partnership interest held by a partner1 the partner receiving such property shall recognize gain equal to the excess 7if any7 of-- 7i7 the fair market value of such property at the time of such distribution1 over 7ii7 the adjusted basis of such property in the hands of such partner 7determined without regard to subparagraph 7,c774 7,b7 ,treatment of gain as ordinary income ,any gain recognized by such partner under subparagraph 7,a7 shall be treated as ordinary income to the same extent and in the same manner as the increase in such partner's distributive share of the taxable income of the partnership would be treated under subsection 7a7 if1 immediately prior to the distribution1 the partnership had sold the distributed property at fair market value and all of the gain from such disposition were allocated to such partner4 ,for purposes of applying paragraphs 7#b7 and 7#c7 of subsection 7a71 any gain treated as ordinary income under this subparagraph shall be treated as an amount treated as ordinary income under subsection 7a77#a77;,a74 7,c7 ,adjustment of basis ,in the case a distribution to which subparagraph 7,a7 applies1 the basis of the distributed property in the hands of the distributee partner shall be the fair market value of such property4 7,d7 ,special rules with respect to mergers1 divisions1 and technical terminations ,in the case of a taxpayer which satisfies requirements similar to the requirements of subparagraphs 7,a7 and 7,b7 of paragraph 7#c71 this paragraph and paragraph 7#a77;,a77ii7 shall not apply to the distribution of a partnership interest if such distribution is in connection with a contribution 7or deemed contribution7 of any property of the partnership to which section #gba applies pursuant to a transaction described in paragraph 7#a77;,b7 or 7#b7 of section #gjh7;b74 7c7 ,investment services partnership interest ,for purposes of this section-- 7#a7 ,in general ,the term investment services partnership interest means any interest in an investment partnership acquired or held by any person in connection with the conduct of a trade or business described in paragraph 7#b7 by such person 7or any person related to such person74 ,an interest in an investment partnership held by any person-- 7,a7 shall not be treated as an investment services partnership interest for any period before the first date on which it is so held in connection with such a trade or business1 7,b7 shall not cease to be an investment services partnership interest merely because such person holds such interest other than in connection with such a trade or business1 and 7,c7 shall be treated as an investment services partnership interest if acquired from a related person in whose hands such interest was an investment services partnership interest4 7#b7 ,businesses to which this section applies ,a trade or business is described in this paragraph if such trade or business primarily involves the performance of any of the following services with respect to assets held 7directly or indirectly7 by the investment partnership referred to in paragraph 7#a73 7,a7 ,advising as to the advisability of investing in1 purchasing1 or selling any specified asset4 7,b7 ,managing1 acquiring1 or disposing of any specified asset4 7,c7 ,arranging financing with respect to acquiring specified assets4 7,d7 ,any activity in support of any service described in subparagraphs 7,a7 through 7,c74 7#c7 ,investment partnership 7,a7 ,in general ,the term investment partnership means any partnership if1 at the end of any calendar quarter ending after ,december #ca1 #bjab-- 7i7 substantially all of the assets of the partnership are specified assets 7determined without regard to any section #aig intangible within the meaning of section #aig7;d771 and 7ii7 more than half of the contributed capital of the partnership is attributable to contributions of property by one or more persons in exchange for interests in the partnership which 7in the hands of such persons7 constitute property held for the production of income4 7,b7 ,special rules for determining if property held for the production of income ,except as otherwise provided by the ,secretary1 for purposes of determining whether any interest in a partnership constitutes property held for the production of income under subparagraph 7,a77ii7-- 7i7 any election under subsection 7e7 or 7f7 of section #dge shall be disregarded1 and 7ii7 paragraph 7#e77;,b7 shall not apply4 7,c7 ,antiabuse rules ,the ,secretary may issue regulations or other guidance which prevent the avoidance of the purposes of subparagraph 7,a71 including regulations or other guidance which treat convertible and contingent debt 7and other debt having the attributes of equity7 as a capital interest in the partnership4 7,d7 ,controlled groups of entities 7i7 ,in general ,in the case of a controlled group of entities1 if an interest in the partnership received in exchange for a contribution to the capital of the partnership by any member of such controlled group would 7in the hands of such member7 constitute property not held for the production of income1 then any interest in such partnership held by any member of such group shall be treated for purposes of subparagraph 7,a7 as constituting 7in the hands of such member7 property not held for the production of income4 7ii7 ,controlled group of entities ,for purposes of clause 7i71 the term controlled group of entities means a controlled group of corporations as defined in section #aefc7;a77#a71 applied without regard to subsections 7a77#d7 and 7b77#b7 of section #aefc4 ,a partnership or any other entity 7other than a corporation7 shall be treated as a member of a controlled group of entities if such entity is controlled 7within the meaning of section #ied7;d77#c77 by members of such group 7including any entity treated as a member of such group by reason of this sentence74 7#d7 ,specified asset ,the term specified asset means securities 7as defined in section #dge7;c77#b7 without regard to the last sentence thereof71 real estate held for rental or investment1 interests in partnerships1 commodities 7as defined in section #dge7;e77#b771 cash or cash equivalents1 or options or derivative contracts with respect to any of the foregoing4 7#e7 ,related persons 7,a7 ,in general ,a person shall be treated as related to another person if the relationship between such persons is described in section #bfg7;b7 or #gjg7;b74 7,b7 ,attribution of partner services ,any service described in paragraph 7#b7 which is provided by a partner of a partnership shall be treated as also provided by such partnership4 7d7 ,exception for certain capital interests 7#a7 ,in general ,in the case of any portion of an investment services partnership interest which is a qualified capital interest1 all items of gain and loss 7and any dividends7 which are allocated to such qualified capital interest shall not be taken into account under subsection 7a7 if-- 7,a7 allocations of items are made by the partnership to such qualified capital interest in the same manner as such allocations are made to other qualified capital interests held by partners who do not provide any services described in subsection 7c77#b7 and who are not related to the partner holding the qualified capital interest1 and 7,b7 the allocations made to such other interests are significant compared to the allocations made to such qualified capital interest4 7#b7 ,authority to provide exceptions to allocation requirements ,to the extent provided by the ,secretary in regulations or other guidance-- 7,a7 ,allocations to portion of qualified capital interest ,paragraph 7#a7 may be applied separately with respect to a portion of a qualified capital interest4 7,b7 ,no or insignificant allocations to nonservice providers ,in any case in which the requirements of paragraph 7#a77;,b7 are not satisfied1 items of gain and loss 7and any dividends7 shall not be taken into account under subsection 7a7 to the extent that such items are properly allocable under such regulations or other guidance to qualified capital interests4 7,c7 ,allocations to service providers' qualified capital interests which are less than other allocations ,allocations shall not be treated as failing to meet the requirement of paragraph 7#a77;,a7 merely because the allocations to the qualified capital interest represent a lower return than the allocations made to the other qualified capital interests referred to in such paragraph4 7#c7 ,special rule for changes in services and capital contributions ,in the case of an interest in a partnership which was not an investment services partnership interest and which1 by reason of a change in the services with respect to assets held 7directly or indirectly7 by the partnership or by reason of a change in the capital contributions to such partnership1 becomes an investment services partnership interest1 the qualified capital interest of the holder of such partnership interest immediately after such change shall not1 for purposes of this subsection1 be less than the fair market value of such interest 7determined immediately before such change74 7#d7 ,special rule for tiered partnerships ,except as otherwise provided by the ,secretary1 in the case of tiered partnerships1 all items which are allocated in a manner which meets the requirements of paragraph 7#a7 to qualified capital interests in a lower-tier partnership shall retain such character to the extent allocated on the basis of qualified capital interests in any upper-tier partnership4 7#e7 ,exception for no-self-charged carry and management fee provisions ,except as otherwise provided by the ,secretary1 an interest shall not fail to be treated as satisfying the requirement of paragraph 7#a77;,a7 merely because the allocations made by the partnership to such interest do not reflect the cost of services described in subsection 7c77#b7 which are provided 7directly or indirectly7 to the partnership by the holder of such interest 7or a related person74 7#f7 ,special rule for dispositions ,in the case of any investment services partnership interest any portion of which is a qualified capital interest1 subsection 7b7 shall not apply to so much of any gain or loss as bears the same proportion to the entire amount of such gain or loss as-- 7,a7 the distributive share of gain or loss that would have been allocated to the qualified capital interest 7consistent with the requirements of paragraph 7#a77 if the partnership had sold all of its assets at fair market value immediately before the disposition1 bears to 7,b7 the distributive share of gain or loss that would have been so allocated to the investment services partnership interest of which such qualified capital interest is a part4 7#g7 ,qualified capital interest ,for purposes of this subsection-- 7,a7 ,in general ,the term qualified capital interest means so much of a partner's interest in the capital of the partnership as is attributable to-- 7i7 the fair market value of any money or other property contributed to the partnership in exchange for such interest 7determined without regard to section #geb7;a771 7ii7 any amounts which have been included in gross income under section #hc with respect to the transfer of such interest1 and 7iii7 the excess 7if any7 of-- 7,i7 any items of income and gain taken into account under section #gjb with respect to such interest1 over 7,,ii7 any items of deduction and loss so taken into account4 7,b7 ,adjustment to qualified capital interest 7i7 ,distributions and losses ,the qualified capital interest shall be reduced by distributions from the partnership with respect to such interest and by the excess 7if any7 of the amount described in subparagraph 7,a77iii77,,ii7 over the amount described in subparagraph 7,a77iii77,i74 7ii7 ,special rule for contributions of property ,in the case of any contribution of property described in subparagraph 7,a77i7 with respect to which the fair market value of such property is not equal to the adjusted basis of such property immediately before such contribution1 proper adjustments shall be made to the qualified capital interest to take into account such difference consistent with such regulations or other guidance as the ,secretary may provide4 7,c7 ,technical terminations1 etc41 disregarded ,no increase or decrease in the qualified capital interest of any partner shall result from a termination1 merger1 consolidation1 or division described in section #gjh1 or any similar transaction4 7#h7 ,treatment of certain loans 7,a7 ,proceeds of partnership loans not treated as qualified capital interest of service providing partners ,for purposes of this subsection1 an investment services partnership interest shall not be treated as a qualified capital interest to the extent that such interest is acquired in connection with the proceeds of any loan or other advance made or guaranteed1 directly or indirectly1 by any other partner or the partnership 7or any person related to any such other partner or the partnership74 ,the preceding sentence shall not apply to the extent the loan or other advance is repaid before ,january #a1 #bjac unless such repayment is made with the proceeds of a loan or other advance described in the preceding sentence4 7,b7 ,reduction in allocations to qualified capital interests for loans from nonservice-providing partners to the partnership ,for purposes of this subsection1 any loan or other advance to the partnership made or guaranteed1 directly or indirectly1 by a partner not providing services described in subsection 7c77#b7 to the partnership 7or any person related to such partner7 shall be taken into account in determining the qualified capital interests of the partners in the partnership4 7e7 ,other income and gain in connection with investment management services 7#a7 ,in general ,if-- 7,a7 a person performs 7directly or indirectly7 investment management services for any investment entity1 7,b7 such person holds 7directly or indirectly7 a disqualified interest with respect to such entity1 and 7,c7 the value of such interest 7or payments thereunder7 is substantially related to the amount of income or gain 7whether or not realized7 from the assets with respect to which the investment management services are performed1 any income or gain with respect to such interest shall be treated as ordinary income4 ,rules similar to the rules of subsections 7a77#e7 and 7d7 shall apply for purposes of this subsection4 7#b7 ,definitions ,for purposes of this subsection-- 7,a7 ,disqualified interest 7i7 ,in general ,the term disqualified interest means1 with respect to any investment entity-- 7,i7 any interest in such entity other than indebtedness1 7,,ii7 convertible or contingent debt of such entity1 7,,iii7 any option or other right to acquire property described in subclause 7,i7 or 7,,ii71 and 7,,iv7 any derivative instrument entered into 7directly or indirectly7 with such entity or any investor in such entity4 7ii7 ,exceptions ,such term shall not include-- 7,i7 a partnership interest1 7,,ii7 except as provided by the ,secretary1 any interest in a taxable corporation1 and 7,,iii7 except as provided by the ,secretary1 stock in an ,s corporation4 7,b7 ,taxable corporation ,the term taxable corporation means-- 7i7 a domestic ,c corporation1 or 7ii7 a foreign corporation substantially all of the income of which is-- 7,i7 effectively connected with the conduct of a trade or business in the ,united ,states1 or 7,,ii7 subject to a comprehensive foreign income tax 7as defined in section #deg;,a7d77#b774 7,c7 ,investment management services ,the term investment management services means a substantial quantity of any of the services described in subsection 7c77#b74 7,d7 ,investment entity ,the term investment entity means any entity which1 if it were a partnership1 would be an investment partnership4 7f7 ,regulations ,the ,secretary shall prescribe such regulations or other guidance as is necessary or appropriate to carry out the purposes of this section1 including regulations or other guidance to-- 7#a7 provide modifications to the application of this section 7including treating related persons as not related to one another7 to the extent such modification is consistent with the purposes of this section1 and 7#b7 coordinate this section with the other provisions of this title4 7g7 ,cross reference ,for #dj percent penalty on certain underpayments due to the avoidance of this section1 see section #fffb4 4 7b7 ,application of section #gea to indirect dispositions of investment services partnership interests 7#a7 ,in general ,subsection 7a7 of section #gea of the ,internal ,revenue ,code of #aihf is amended by striking or at the end of paragraph 7#a71 by inserting or at the end of paragraph 7#b71 and by inserting after paragraph 7#b7 the following new paragraph3 7#c7 investment services partnership interests held by the partnership1 4 7#b7 ,certain distributions treated as sales or exchanges ,subparagraph 7,a7 of section #gea7;b77#a7 of the ,internal ,revenue ,code of #aihf is amended by striking or at the end of clause 7i71 by inserting or at the end of clause 7ii71 and by inserting after clause 7ii7 the following new clause3 7iii7 investment services partnership interests held by the partnership1 4 7#c7 ,application of special rules in the case of tiered partnerships ,subsection 7f7 of section #gea of the ,internal ,revenue ,code of #aihf is amended by striking or at the end of paragraph 7#a71 by inserting or at the end of paragraph 7#b71 and by inserting after paragraph 7#b7 the following new paragraph3 7#c7 investment services partnership interests held by the partnership1 4 7#d7 ,investment services partnership interests2 qualified capital interests ,section #gea of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7g7 ,investment services partnership interests ,for purposes of this section-- 7#a7 ,in general ,the term investment services partnership interest has the meaning given such term by section #gaj7;c74 7#b7 ,adjustments for qualified capital interests ,the amount to which subsection 7a7 applies by reason of paragraph 7#c7 thereof shall not include so much of such amount as is attributable to any portion of the investment services partnership interest which is a qualified capital interest 7determined under rules similar to the rules of section #gaj7;d774 7#c7 ,recognition of gains ,any gain with respect to which subsection 7a7 applies by reason of paragraph 7#c7 thereof shall be recognized notwithstanding any other provision of this title4 7#d7 ,coordination with inventory items ,an investment services partnership interest held by the partnership shall not be treated as an inventory item of the partnership4 7#e7 ,prevention of double counting ,under regulations or other guidance prescribed by the ,secretary1 subsection 7a77#c7 shall not apply with respect to any amount to which section #gaj applies4 4 7c7 ,treatment for purposes of section #ggjd ,subsection 7d7 of section #ggjd of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new paragraph3 7#f7 ,income from certain carried interests not qualified 7,a7 ,in general ,specified carried interest income shall not be treated as qualifying income4 7,b7 ,specified carried interest income ,for purposes of this paragraph-- 7i7 ,in general ,the term specified carried interest income means-- 7,i7 any item of income or gain allocated to an investment services partnership interest 7as defined in section #gaj7;c77 held by the partnership1 7,,ii7 any gain on the disposition of an investment services partnership interest 7as so defined7 or a partnership interest to which 7in the hands of the partnership7 section #gea applies1 and 7,,iii7 any income or gain taken into account by the partnership under subsection 7b77#d7 or 7e7 of section #gaj4 7ii7 ,exception for qualified capital interests ,a rule similar to the rule of section #gaj7;d7 shall apply for purposes of clause 7i74 7,c7 ,coordination with other provisions ,subparagraph 7,a7 shall not apply to any item described in paragraph 7#a77;,e7 7or so much of paragraph 7#a77;,f7 as relates to paragraph 7#a77;,e774 7,d7 ,special rules for certain partnerships 7i7 ,certain partnerships owned by real estate investment trusts ,subparagraph 7,a7 shall not apply in the case of a partnership which meets each of the following requirements3 7,i7 ,such partnership is treated as publicly traded under this section solely by reason of interests in such partnership being convertible into interests in a real estate investment trust which is publicly traded4 7,,ii7 ,fifty percent or more of the capital and profits interests of such partnership are owned1 directly or indirectly1 at all times during the taxable year by such real estate investment trust 7determined with the application of section #bfg7;c774 7,,iii7 ,such partnership meets the requirements of paragraphs 7#b71 7#c71 and 7#d7 of section #hef7;c74 7ii7 ,certain partnerships owning other publicly traded partnerships ,subparagraph 7,a7 shall not apply in the case of a partnership which meets each of the following requirements3 7,i7 ,substantially all of the assets of such partnership consist of interests in one or more publicly traded partnerships 7determined without regard to subsection 7b77#b774 7,,ii7 ,substantially all of the income of such partnership is ordinary income or section #abca gain 7as defined in section #abca7;a77#c774 7,e7 ,transitional rule ,subparagraph 7,a7 shall not apply to any taxable year of the partnership beginning before the date which is #aj years after ,january #a1 #bjac4 4 7d7 ,imposition of penalty on underpayments 7#a7 ,in general ,subsection 7b7 of section #fffb of the ,internal ,revenue ,code of #aihf is amended by inserting after paragraph 7#g7 the following new paragraph3 7#h7 ,the application of section #gaj7;e7 or the regulations or other guidance prescribed under section #gaj7;h7 to prevent the avoidance of the purposes of section #gaj4 4 7#b7 ,amount of penalty 7,a7 ,in general ,section #fffb of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7k7 ,increase in penalty in case of property transferred for investment management services ,in the case of any portion of an underpayment to which this section applies by reason of subsection 7b77#h71 subsection 7a7 shall be applied with respect to such portion by substituting #dj percent for #bj percent4 4 7,b7 ,conforming amendment ,subparagraph 7,b7 of section #fffb;,a7e77#b7 is amended by striking or 7i7 and inserting 1 7i71 or 7k74 7#c7 ,special rules for application of reasonable cause exception ,subsection 7c7 of section #fffd is amended-- 7,a7 by redesignating paragraphs 7#c7 and 7#d7 as paragraphs 7#d7 and 7#e71 respectively2 7,b7 by striking paragraph 7#c7 in paragraph 7#e77;,a71 as so redesignated1 and inserting paragraph 7#d72 and 7,c7 by inserting after paragraph 7#b7 the following new paragraph3 7#c7 ,special rule for underpayments attributable to investment management services 7,a7 ,in general ,paragraph 7#a7 shall not apply to any portion of an underpayment to which section #fffb applies by reason of subsection 7b77#h7 unless-- 7i7 the relevant facts affecting the tax treatment of the item are adequately disclosed1 7ii7 there is or was substantial authority for such treatment1 and 7iii7 the taxpayer reasonably believed that such treatment was more likely than not the proper treatment4 7,b7 ,rules relating to reasonable belief ,rules similar to the rules of subsection 7d77#c7 shall apply for purposes of subparagraph 7,a77iii74 4 7e7 ,income and loss from investment services partnership interests taken into account in determining net earnings from self-,employment 7#a7 ,internal revenue code 7,a7 ,in general ,section #adjb7;a7 of the ,internal ,revenue ,code of #aihf is amended by striking and at the end of paragraph 7#af71 by striking the period at the end of paragraph 7#ag7 and inserting 2 and1 and by inserting after paragraph 7#ag7 the following new paragraph3 7#ah7 notwithstanding the preceding provisions of this subsection1 in the case of any individual engaged in the trade or business of providing services described in section #gaj7;c77#b7 with respect to any entity1 investment services partnership income or loss 7as defined in subsection 7m77 of such individual with respect to such entity shall be taken into account in determining the net earnings from self-employment of such individual4 4 7,b7 ,investment services partnership income or loss ,section #adjb of the ,internal ,revenue ,code is amended by adding at the end the following new subsection3 7m7 ,investment services partnership income or loss ,for purposes of subsection 7a7-- 7#a7 ,in general ,the term investment services partnership income or loss means1 with respect to any investment services partnership interest 7as defined in section #gaj7;c771 the net of-- 7,a7 the amounts treated as ordinary income or ordinary loss under subsections 7b7 and 7e7 of section #gaj with respect to such interest1 7,b7 all items of income1 gain1 loss1 and deduction allocated to such interest1 and 7,c7 the amounts treated as realized from the sale or exchange of property other than a capital asset under section #gea with respect to such interest4 7#b7 ,exception for qualified capital interests ,a rule similar to the rule of section #gaj7;d7 shall apply for purposes of applying paragraph 7#a77;,b77ii74 4 7#b7 ,social security ,act ,section #baa7;a7 of the ,social ,security ,act is amended by striking and at the end of paragraph 7#ae71 by striking the period at the end of paragraph 7#af7 and inserting 2 and1 and by inserting after paragraph 7#af7 the following new paragraph3 7#ag7 ,notwithstanding the preceding provisions of this subsection1 in the case of any individual engaged in the trade or business of providing services described in section #gaj7;c77#b7 of the ,internal ,revenue ,code of #aihf with respect to any entity1 investment services partnership income or loss 7as defined in section #adjb7m7 of such ,code7 shall be taken into account in determining the net earnings from self-employment of such individual4 4 7f7 ,conforming amendments 7#a7 ,subsection 7d7 of section #gca of the ,internal ,revenue ,code of #aihf is amended by inserting section #gaj7;b77#d7 7relating to distributions of partnership property71 after to the extent otherwise provided by4 7#b7 ,section #gda of the ,internal ,revenue ,code of #aihf is amended by inserting or section #gaj 7relating to special rules for partners providing investment management services to partnerships7 before the period at the end4 7#c7 ,the table of sections for part ,i of subchapter ,k of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new item3 ,sec4 #gaj4 ,special rules for partners providing investment management services to partnerships4 4 7g7 ,effective date 7#a7 ,in general ,except as otherwise provided in this subsection1 the amendments made by this section shall apply to taxable years ending after ,december #ca1 #bjab4 7#b7 ,partnership taxable years which include effective date ,in applying section #gaj7;a7 of the ,internal ,revenue ,code of #aihf 7as added by this section7 in the case of any partnership taxable year which includes ,january #a1 #bjac1 the amount of the net income referred to in such section shall be treated as being the lesser of the net income for the entire partnership taxable year or the net income determined by only taking into account items attributable to the portion of the partnership taxable year which is after such date4 7#c7 ,dispositions of partnership interests 7,a7 ,in general ,section #gaj7;b7 of such ,code 7as added by this section7 shall apply to dispositions and distributions after ,december #ca1 #bjab4 7,b7 ,indirect dispositions ,the amendments made by subsection 7b7 shall apply to transactions after ,december #ca1 #bjab4 7#d7 ,other income and gain in connection with investment management services ,section #gaj7;e7 of such ,code 7as added by this section7 shall take effect on ,january #a1 #bjac4 ,c ,dual capacity taxpayers #bba4 ,modifications of foreign tax credit rules applicable to dual capacity taxpayers 7a7 ,in general ,section #ija of the ,internal ,revenue ,code of #aihf 7relating to credit for taxes of foreign countries and of possessions of the ,united ,states7 is amended by redesignating subsection 7n7 as subsection 7o7 and by inserting after subsection 7m7 the following new subsection3 7n7 ,special rules relating to dual capacity taxpayers 7#a7 ,general rule ,notwithstanding any other provision of this chapter1 any amount paid or accrued by a dual capacity taxpayer or any member of the worldwide affiliated group of which such dual capacity taxpayer is also a member to any foreign country or to any possession of the ,united ,states for any period shall not be considered a tax to the extent such amount exceeds the amount 7determined in accordance with regulations7 which would have been required to be paid if the taxpayer were not a dual capacity taxpayer4 7#b7 ,dual capacity taxpayer ,for purposes of this subsection1 the term dual capacity taxpayer means1 with respect to any foreign country or possession of the ,united ,states1 a person who-- 7,a7 is subject to a levy of such country or possession1 and 7,b7 receives 7or will receive7 directly or indirectly a specific economic benefit 7as determined in accordance with regulations7 from such country or possession4 7#c7 ,regulations ,the ,secretary may issue such regulations or other guidance as is necessary or appropriate to carry out the purposes of this subsection4 4 7b7 ,contrary treaty obligations upheld ,the amendments made by this section shall not apply to the extent contrary to any treaty obligation of the ,united ,states4 7c7 ,effective date ,the amendments made by this section shall apply to amounts that1 if such amounts were an amount of tax paid or accrued1 would be considered paid or accrued in taxable years beginning after ,december #ca1 #bjab4 #bbb4 ,separate basket treatment taxes paid on foreign oil and gas income 7a7 ,separate basket for foreign tax credit ,paragraph 7#a7 of section #ijd7;d7 of the ,internal ,revenue ,code of #aihf is amended by striking and at the end of subparagraph 7,a71 by striking the period at the end of subparagraph 7,b7 and inserting 1 and1 and by adding at the end the following3 7,c7 combined foreign oil and gas income 7as defined in section #ijg7;b77#a774 4 7b7 ,coordination ,section #ijd7;d77#b7 of such ,code is amended by redesignating subparagraphs 7,j7 and 7,k7 as subparagraphs 7,k7 and 7,l7 and by inserting after subparagraph 7,i7 the following3 7,j7 ,coordination with combined foreign oil and gas income ,for purposes of this section1 passive category income and general category income shall not include combined foreign oil and gas income 7as defined in section #ijg7;b77#a774 4 7c7 ,conforming amendments 7#a7 ,section #ijg7;a7 is hereby repealed4 7#b7 ,section #ijg7;c77#d7 is hereby repealed4 7#c7 ,section #ijg7;f7 is hereby repealed4 7d7 ,effective dates 7#a7 ,in general ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjab4 7#b7 ,transitional rules 7,a7 ,carryovers ,any unused foreign oil and gas taxes which under section #ijg7;f7 of such ,code 7as in effect before the amendment made by subsection 7c77#c77 would have been allowable as a carryover to the taxpayer's first taxable year beginning after ,december #ca1 #bjab 7without regard to the limitation of paragraph 7#b7 of such section #ijg7;f7 for first taxable year7 shall be allowed as carryovers under section #ijd7;c7 of such ,code in the same manner as if such taxes were unused taxes under such section #ijd7;c7 with respect to foreign oil and gas extraction income4 7,b7 ,losses ,the amendment made by subsection 7c77#b7 shall not apply to foreign oil and gas extraction losses arising in taxable years beginning on or before the date of the enactment of this ,act4 ,d ,close ,exclusion of ,foreign-,earned ,income ,loophole #bca4 ,repeal of foreign earned income exclusion 7a7 ,in general ,subsection 7a7 of section #iaa of the ,internal ,revenue ,code of #aihf is amended by striking for any taxable year-- and all that follows through the end and inserting for any taxable year the housing cost amount of such individual44 7b7 ,conforming amendments 7#a7 ,subsection 7f7 of section #hf of such ,code is amended by inserting and at the end of paragraph 7#b71 by striking 1 and at the end of paragraph 7#c7 and inserting a period1 and by striking paragraph 7#d74 7#b7 ,section #adja7;a7 of such ,code is amended by striking paragraph 7#aa74 7#c7 7,a7 ,clause 7i7 of section #adaa7;a77#a77;,b7 of such ,code is amended by striking modified4 7,b7 ,section #adaa of such ,code is amended by striking subsection 7d7 and by redesignating subsection 7e7 as subsection 7d74 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 ,e ,close ,s ,corporation ,loophole #bda4 ,employment tax treatment of professional service businesses 7a7 ,in general ,section #adjb of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7m7 ,special rules for professional service businesses 7#a7 ,shareholders providing services to specified s corporations 7,a7 ,in general ,in the case of an applicable shareholder who provides substantial services with respect to a professional service business referred to in subparagraph 7,c7 of a specified ,s corporation-- 7i7 such shareholder shall be treated as engaged in the trade or business of such professional service business with respect to items of income or loss described in section #acff which are attributable to such business1 and 7ii7 such shareholder's net earnings from self-employment shall include such shareholder's pro rata share of such items of income or loss1 except that in computing such pro rata share of such items the exceptions provided in subsection 7a7 shall apply4 7,b7 ,treatment of family members ,except as otherwise provided by the ,secretary1 the applicable shareholder's pro rata share of items referred to in subparagraph 7,a7 shall be increased by the pro rata share of such items of each member of such applicable shareholder's family 7within the meaning of section #cah7;a77#a77 who does not provide substantial services with respect to such professional service business4 7,c7 ,specified s corporation ,for purposes of this subsection1 the term specified ,s corporation means-- 7i7 any ,s corporation which is a partner in a partnership which is engaged in a professional service business if substantially all of the activities of such ,s corporation are performed in connection with such partnership1 and 7ii7 any other ,s corporation which is engaged in a professional service business if #ge percent or more of the gross income of such business is attributable to service of #c or fewer shareholders of such corporation4 7,d7 ,applicable shareholder ,for purposes of this paragraph1 the term applicable shareholder means any shareholder whose modified adjusted gross income for the taxable year exceeds-- 7i7 in the case of a shareholder making a joint return under section #fjac or a surviving spouse 7as defined in section #b7;a771 #bej1jjj1 7ii7 in the case of a married shareholder 7as defined in section #ggjc7 filing a separate return1 half of the dollar amount determined under clause 7i71 and 7iii7 in any other case1 #bjj1jjj4 7#b7 ,partners 7,a7 ,in general ,in the case of any partnership which is engaged in a professional service business1 subsection 7a77#ac7 shall not apply to any applicable partner who provides substantial services with respect to such professional service business4 7,b7 ,applicable partner ,for purposes of this paragraph1 the term applicable partner means any partner whose modified adjusted gross income for the taxable year exceeds-- 7i7 in the case of a partner making a joint return under section #fjac or a surviving spouse 7as defined in section #b7;a771 #bej1jjj1 7ii7 in the case of a married partner 7as defined in section #ggjc7 filing a separate return1 half of the dollar amount determined under clause 7i71 and 7iii7 in any other case1 #bjj1jjj4 7#c7 ,professional service business ,for purposes of this subsection1 the term professional service business means any trade or business 7or portion thereof7 providing services in the fields of health1 law1 lobbying1 engineering1 architecture1 accounting1 actuarial science1 performing arts1 consulting1 athletics1 investment advice or management1 or brokerage services4 7#d7 ,modified adjusted gross income ,for purposes of this subsection1 the term modified adjusted gross income means adjusted gross income-- 7,a7 determined without regard to any deduction allowed under section #afd7;f71 and 7,b7 increased by the amount excluded from gross income under section #iaa7;a77#a74 7#e7 ,regulations ,the ,secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection1 including regulations which prevent the avoidance of the purposes of this subsection through tiered entities or otherwise4 7#f7 ,cross reference ,for employment tax treatment of wages paid to shareholders of ,s corporations1 see subtitle ,c4 4 7b7 ,conforming amendment ,section #baa of the ,social ,security ,act is amended by adding at the end the following new subsection3 7l7 ,special rules for professional service businesses 7#a7 ,shareholders providing services to specified s corporations 7,a7 ,in general ,in the case of an applicable shareholder who provides substantial services with respect to a professional service business referred to in subparagraph 7,c7 of a specified ,s corporation-- 7i7 such shareholder shall be treated as engaged in the trade or business of such professional service business with respect to items of income or loss described in section #acff of the ,internal ,revenue ,code of #aihf which are attributable to such business1 and 7ii7 such shareholder's net earnings from self-employment shall include such shareholder's pro rata share of such items of income or loss1 except that in computing such pro rata share of such items the exceptions provided in subsection 7a7 shall apply4 7,b7 ,treatment of family members ,except as otherwise provided by the ,secretary of the ,treasury1 the applicable shareholder's pro rata share of items referred to in subparagraph 7,a7 shall be increased by the pro rata share of such items of each member of such applicable shareholder's family 7within the meaning of section #cah7;a77#a7 of the ,internal ,revenue ,code of #aihf7 who does not provide substantial services with respect to such professional service business4 7,c7 ,specified s corporation ,for purposes of this subsection1 the term specified ,s corporation means-- 7i7 any ,s corporation 7as defined in section #acfa7;a7 of the ,internal ,revenue ,code of #aihf7 which is a partner in a partnership which is engaged in a professional service business if substantially all of the activities of such ,s corporation are performed in connection with such partnership1 and 7ii7 any other ,s corporation 7as so defined7 which is engaged in a professional service business if #ge percent or more of the gross income of such business is attributable to service of #c or fewer shareholders of such corporation4 7,d7 ,applicable shareholder ,for purposes of this paragraph1 the term applicable shareholder means any shareholder whose modified adjusted gross income for the taxable year exceeds-- 7i7 in the case of a shareholder making a joint return under section #fjac of the ,internal ,revenue ,code of #aihf or a surviving spouse 7as defined in section #b7;a7 of such ,code71 #bej1jjj1 7ii7 in the case of a married shareholder 7as defined in section #ggjc of such ,code7 filing a separate return1 half of the dollar amount determined under clause 7i71 and 7iii7 in any other case1 #bjj1jjj4 7#b7 ,partners 7,a7 ,in general ,in the case of any partnership which is engaged in a professional service business1 subsection 7a77#ab7 shall not apply to any applicable partner who provides substantial services with respect to such professional service business4 7,b7 ,applicable partner ,for purposes of this paragraph1 the term applicable partner means any partner whose modified adjusted gross income for the taxable year exceeds-- 7i7 in the case of a partner making a joint return under section #fjac of the ,internal ,revenue ,code of #aihf or a surviving spouse 7as defined in section #b7;a7 of such ,code71 #bej1jjj1 7ii7 in the case of a married partner 7as defined in section #ggjc of such ,code7 filing a separate return1 half of the dollar amount determined under clause 7i71 and 7iii7 in any other case1 #bjj1jjj4 7#c7 ,professional service business ,for purposes of this subsection1 the term professional service business means any trade or business 7or portion thereof7 providing services in the fields of health1 law1 lobbying1 engineering1 architecture1 accounting1 actuarial science1 performing arts1 consulting1 athletics1 investment advice or management1 or brokerage services4 7#d7 ,modified adjusted gross income ,for purposes of this subsection1 the term modified adjusted gross income means adjusted gross income as determined under section #fb of the ,internal ,revenue ,code of #aihf-- 7,a7 determined without regard to any deduction allowed under section #afd7;f7 of such ,code1 and 7,b7 increased by the amount excluded from gross income under section #iaa7;a77#a7 of such ,code4 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjab4 ,f ,limitation on ,mortgage ,interest ,deduction ,with ,respect to ,boats #bea4 ,mortgage interest deduction allowed with respect to boats only if boat is used as the principal residence of the taxpayer 7a7 ,in general ,subclause 7ii7 of section #afc7;h77#d77;,a7 of the ,internal ,revenue ,code of #aihf is amended by inserting 7other than a boat7 after #a other residence of the taxpayer4 7b7 ,effective date 7#a7 ,in general ,the amendment made by this section shall apply to indebtedness incurred after the date of the enactment of this ,act4 7#b7 ,special rule for refinancings ,for purposes of this subsection1 indebtedness resulting from the refinancing of indebtedness shall be treated as incurred on the date the refinanced indebtedness was incurred 7taking into account the application of this paragraph in the case of multiple refinancings7 but only to the extent the indebtedness resulting from such refinancing does not exceed the refinanced indebtedness4 ,,iii ,ending ,corporate ,subsidies ,a ,end ,fossil ,fuel ,subsidies #cja4 ,termination of various tax expenditures relating to fossil fuels 7a7 ,in general ,subchapter ,c of chapter #ij of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #ghge4 ,termination of certain provisions relating to fossil fuel incentives 7a7 ,in general ,the following provisions shall not apply to taxable years beginning after the date of the enactment of the ,balancing ,act3 7#a7 ,section #dc 7relating to enhanced oil recovery credit74 7#b7 ,section #de;,i 7relating to credit for producing oil and natural gas from marginal wells74 7#c7 ,section #de,k 7relating to credit for producing fuel from a nonconventional source74 7#d7 ,section #aic 7relating to tertiary injectants74 7#e7 ,section #aii7;d77#i7 7relating to special rule for taxpayers with oil related qualified production activities income74 7#f7 ,section #dfa7;i77#b7 7relating to special rule for spudding of oil or natural gas wells74 7#g7 ,section #dfi7;c77#c7 7relating to working interests in oil and natural gas property74 7#h7 ,section #fac;,a 7relating to limitations on percentage depletion in case of oil and natural gas wells74 7#i7 ,section #fag 7relating to deduction and recapture of certain mining exploration expenditures74 7#aj7 ,section #ggjd7;d77#a77;,e7 7relating to qualifying income74 7b7 ,provisions relating to property ,the following provisions shall not apply to property placed in service after the date of the enactment of the ,balancing ,act3 7#a7 ,subparagraphs 7,c77iii7 and 7,e77viii7 of section #afh7;e77#c7 7relating to classification of certain property74 7#b7 ,section #afi 7relating to amortization of pollution control facilities7 with respect to any atmospheric pollution control facility4 7#c7 ,section #agi;,c 7relating to election to expense certain refineries74 7c7 ,provisions relating to costs and expenses ,the following provisions shall not apply to costs or expenses paid or incurred after the date of the enactment of the ,balancing ,act3 7#a7 ,section #agi;,b 7relating to deduction for capital costs incurred in complying with ,environmental ,protection ,agency sulfur regulations74 7#b7 ,section #aih 7relating to expensing of environmental remediation costs74 7#c7 ,section #bfc7;c7 7relating to intangible drilling and development costs7 with respect to costs in the case of oil and natural gas wells4 7#d7 ,section #dfh 7relating to special rules for mining and solid waste reclamation and closing costs74 7d7 #e-,year carryback for marginal oil and natural gas well production credit ,section #ci7;a77#c7 7relating to #e-year carryback for marginal oil and natural gas well production credit7 shall not apply to credits determined in taxable years beginning after the date of the enactment of the ,balancing ,act4 7e7 ,credit for carbon dioxide sequestration ,section #de,q 7relating to credit for carbon dioxide sequestration7 shall not apply to carbon dioxide captured after the date of the enactment of the ,balancing ,act4 7f7 ,allocated credits ,no new credits shall be certified under section #dh;,a 7relating to qualifying advanced coal project credit7 or section #dh;,b 7relating to qualifying gasification project credit7 after the date of the enactment of the ,balancing ,act4 7g7 ,arbitrage bonds ,section #adh7;b77#d7 7relating to safe harbor for prepaid natural gas7 shall not apply to obligations issued after the date of the enactment of the ,balancing ,act4 4 7b7 ,conforming amendment ,the table of sections for subchapter ,c of chapter #ij is amended by adding at the end the following new item3 ,sec4 #ghge4 ,termination of certain provisions4 4 #cjb4 ,termination of alternative fuel vehicle refueling property credit with respect to fossil fuels 7a7 ,in general ,paragraph 7#b7 of section #cj;,c7c7 of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by striking 1 natural gas1 compressed natural gas1 liquefied natural gas1 liquefied petroleum gas1 in subparagraph 7,a71 7#b7 by striking subparagraph 7,b71 and 7#c7 by redesignating subparagraph 7,c7 as subparagraph 7,b74 7b7 ,technical amendment ,paragraph 7#b7 of section #cj;,c7g7 of the ,internal ,revenue ,code of #aihf is amended by striking the second period4 7c7 ,effective date ,the amendments made by this section shall apply to property placed in service after ,december #ca1 #bjab4 #cjc4 ,uniform seven-year amortization for geological and geophysical expenditures 7a7 ,in general ,section #afg7;h7 of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by striking #bd-month period each place it appears in paragraphs 7#a7 and 7#d7 and inserting #g-year period1 and 7#b7 by striking paragraph 7#e74 7b7 ,effective date ,the amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this ,act4 #cjd4 ,repeal of domestic manufacturing deduction for hard mineral mining 7a7 ,in general ,subparagraph 7,b7 of section #aii7;c77#d7 of the ,internal ,revenue ,code of #aihf is amended by striking and at the end of clause 7ii71 by striking the period at the end of clause 7iii7 and inserting 1 and1 and by adding at the end the following new clause3 7iv7 the mining of any hard mineral4 4 7b7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 #cje4 ,limitation on deduction for income attributable to domestic production of oil1 natural gas1 or primary products thereof 7a7 ,denial of deduction ,paragraph 7#d7 of section #aii7;c7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subparagraph3 7,e7 ,special rule for oil1 natural gas1 and coal income ,the term domestic production gross receipts shall not include gross receipts from the production1 refining1 processing1 transportation1 or distribution of oil1 natural gas1 or coal1 or any primary product 7within the meaning of subsection 7d77#i77 thereof4 4 7b7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 #cjf4 ,termination of last-in1 first-out method of inventory for oil1 natural gas1 and coal companies 7a7 ,in general ,section #dgb of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7h7 ,termination for oil1 natural gas1 and coal companies ,subsection 7a7 shall not apply to any taxpayer that is in the trade or business of the production1 refining1 processing1 transportation1 or distribution of oil1 natural gas1 or coal for any taxable year beginning after ,december #ca1 #bjab4 4 7b7 ,additional termination ,section #dgc of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7h7 ,termination for oil1 natural gas1 and coal companies ,this section shall not apply to any taxpayer that is in the trade or business of the production1 refining1 processing1 transportation1 or distribution of oil1 natural gas1 or coal for any taxable year beginning after ,december #ca1 #bjab4 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 #cjg4 ,repeal of percentage depletion for coal and hard mineral fossil fuels 7a7 ,in general ,section #fac of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7f7 ,termination with respect to coal and hard mineral fossil fuels ,in the case of coal1 lignite1 and oil shale 7other than oil shale described in subsection 7b77#e771 the allowance for depletion shall be computed without reference to this section for any taxable year beginning after the date of the enactment of the ,balancing ,act4 4 7b7 ,conforming amendments 7#a7 ,coal and lignite ,section #fac7;b77#d7 of the ,internal ,revenue ,code of #aihf is amended by striking coal1 lignite14 7#b7 ,oil shale ,section #fac7;b77#b7 of such ,code is amended to read as follows3 7#b7 #ae percent ,if1 from deposits in the ,united ,states1 gold1 silver1 copper1 and iron ore4 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 #cjh4 ,termination of capital gains treatment for royalties from coal 7a7 ,in general ,subsection 7c7 of section #fca of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by striking coal 7including lignite71 or iron ore and inserting iron ore1 7#b7 by striking coal or iron ore each place it appears and inserting iron ore1 7#c7 by striking iron ore or coal each place it appears and inserting iron ore1 and 7#d7 by striking coal or in the heading4 7b7 ,conforming amendment ,the heading of section #fca of the ,internal ,revenue ,code of #aihf is amended by striking 1 coal14 7c7 ,effective date ,the amendments made by this section shall apply to dispositions after the date of the enactment of this ,act4 #cji4 ,increase in oil spill liability trust fund financing rate 7a7 ,in general ,subparagraph 7,b7 of section #dfaa7;c77#b7 of the ,internal ,revenue ,code of #aihf is amended to read as follows3 7,b7 the ,oil ,spill ,liability ,trust ,fund financing rate is-- 7i7 in the case of crude oil received or petroleum products entered before ,january #a1 #bjac1 #h cents a barrel1 7ii7 in the case of crude oil received or petroleum products entered after ,december #ca1 #bjab1 and before ,january #a1 #bjag1 #i cents a barrel1 and 7iii7 in the case of crude oil received or petroleum products entered after ,december #ca1 #bjaf1 #aj cents a barrel4 4 7b7 ,effective date ,the amendment made by this section shall apply to crude oil received and petroleum products entered after the date of the enactment of this ,act4 #caj4 ,denial of deduction for removal costs and damages for certain oil spills 7a7 ,in general ,part ,,ix of subchapter ,b of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #bhj;,i4 ,expenses for removal costs and damages relating to certain oil spill liability ,no deduction shall be allowed under this chapter for any amount paid or incurred with respect to any costs or damages for which the taxpayer is liable under section #ajjb of the ,oil ,pollution ,act of #aiij 7#cc ,u4,s4,c4 #bgjb74 4 7b7 ,clerical amendment ,the table of sections for part ,,ix of subchapter ,b of chapter #a of such ,code is amended by adding at the end the following new item3 ,sec4 #bhj;,i4 ,expenses for removal costs and damages relating to certain oil spill liability4 4 7c7 ,effective date ,the amendments made by this section shall apply with respect to any liability arising in taxable years ending after the date of the enactment of this ,act4 #caa4 ,tax on crude oil and natural gas produced from the outer ,continental ,shelf in the ,gulf of ,mexico 7a7 ,in general ,subtitle ,e of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new chapter3 #ef ,tax on severance of crude oil and natural gas from the outer ,continental ,shelf in the ,gulf of ,mexico ,sec4 #ehif4 ,imposition of tax4 ,sec4 #ehig4 ,taxable crude oil or natural gas and removal price4 ,sec4 #ehih4 ,special rules and definitions4 #ehif4 ,imposition of tax 7a7 ,in general ,in addition to any other tax imposed under this title1 there is hereby imposed a tax equal to #ac percent of the removal price of any taxable crude oil or natural gas removed from the premises during any taxable period4 7b7 ,credit for ,federal royalties paid 7#a7 ,in general ,there shall be allowed as a credit against the tax imposed by subsection 7a7 with respect to the production of any taxable crude oil or natural gas an amount equal to the aggregate amount of royalties paid under ,federal law with respect to such production4 7#b7 ,limitation ,the aggregate amount of credits allowed under paragraph 7#a7 to any taxpayer for any taxable period shall not exceed the amount of tax imposed by subsection 7a7 for such taxable period4 7c7 ,tax paid by producer ,the tax imposed by this section shall be paid by the producer of the taxable crude oil or natural gas4 #ehig4 ,taxable crude oil or natural gas and removal price 7a7 ,taxable crude oil or natural gas ,for purposes of this chapter1 the term taxable crude oil or natural gas means crude oil or natural gas which is produced from ,federal submerged lands on the outer ,continental ,shelf in the ,gulf of ,mexico pursuant to a lease entered into with the ,united ,states which authorizes the production4 7b7 ,removal price ,for purposes of this chapter-- 7#a7 ,in general ,except as otherwise provided in this subsection1 the term removal price means-- 7,a7 in the case of taxable crude oil1 the amount for which a barrel of such crude oil is sold1 and 7,b7 in the case of taxable natural gas1 the amount per #a1jjj cubic feet for which such natural gas is sold4 7#b7 ,sales between related persons ,in the case of a sale between related persons1 the removal price shall not be less than the constructive sales price for purposes of determining gross income from the property under section #fac4 7#c7 ,oil or natural gas removed from property before sale ,if crude oil or natural gas is removed from the property before it is sold1 the removal price shall be the constructive sales price for purposes of determining gross income from the property under section #fac4 7#d7 ,refining begun on property ,if the manufacture or conversion of crude oil into refined products begins before such oil is removed from the property-- 7,a7 such oil shall be treated as removed on the day such manufacture or conversion begins1 and 7,b7 the removal price shall be the constructive sales price for purposes of determining gross income from the property under section #fac4 7#e7 ,property ,the term property has the meaning given such term by section #fad4 #ehih4 ,special rules and definitions 7a7 ,administrative requirements 7#a7 ,withholding and deposit of tax ,the ,secretary shall provide for the withholding and deposit of the tax imposed under section #ehif on a quarterly basis4 7#b7 ,records and information ,each taxpayer liable for tax under section #ehif shall keep such records1 make such returns1 and furnish such information 7to the ,secretary and to other persons having an interest in the taxable crude oil or natural gas7 with respect to such oil as the ,secretary may by regulations prescribe4 7#c7 ,taxable periods2 return of tax 7,a7 ,taxable period ,except as provided by the ,secretary1 each calendar year shall constitute a taxable period4 7,b7 ,returns ,the ,secretary shall provide for the filing1 and the time for filing1 of the return of the tax imposed under section #ehif4 7b7 ,definitions ,for purposes of this chapter-- 7#a7 ,producer ,the term producer means the holder of the economic interest with respect to the crude oil or natural gas4 7#b7 ,crude oil ,the term crude oil includes crude oil condensates and natural gasoline4 7#c7 ,premises and crude oil product ,the terms premises and crude oil product have the same meanings as when used for purposes of determining gross income from the property under section #fac4 7c7 ,adjustment of removal price ,in determining the removal price of oil or natural gas from a property in the case of any transaction1 the ,secretary may adjust the removal price to reflect clearly the fair market value of oil or natural gas removed4 7d7 ,regulations ,the ,secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this chapter4 4 7b7 ,deductibility of tax ,the first sentence of section #afd7;a7 is amended by inserting after paragraph 7#f7 the following new paragraph3 7#g7 ,the tax imposed by section #ehif7;a7 7after application of section #ehif7;b77 on the severance of crude oil or natural gas from the outer ,continental ,shelf in the ,gulf of ,mexico4 4 7c7 ,clerical amendment ,the table of chapters for subtitle ,e is amended by adding at the end the following new item3 ,chapter #ef4 ,tax on severance of crude oil and natural gas from the outer ,continental ,shelf in the ,gulf of ,mexico4 4 7d7 ,effective date ,the amendments made by this section shall apply to crude oil or natural gas removed after ,december #ca1 #bjab4 ,b ,ending ,excessive ,corporate ,tax ,deductions for ,stock ,options #cca4 ,consistent treatment of stock options by corporations 7a7 ,consistent treatment for wage deduction 7#a7 ,in general ,section #hc7;h7 is amended-- 7,a7 by striking ,in the case of and inserting3 7#a7 ,in general ,in the case of 1 and 7,b7 by adding at the end the following new paragraph3 7#b7 ,stock options ,in the case of property transferred to a person in connection with a stock option1 any deduction related to such stock option shall be allowed only under section #afb7q7 and paragraph 7#a7 shall not apply4 4 7#b7 ,treatment of compensation paid with stock options ,section #afb is amended by redesignating subsection 7q7 as subsection 7r7 and by inserting after subsection 7p7 the following new subsection3 7q7 ,treatment of compensation paid with stock options 7#a7 ,in general ,in the case of compensation for personal services that is paid with stock options1 the deduction under subsection 7a77#a7 shall not exceed the amount the taxpayer has treated as compensation cost with respect to such stock options for the purpose of ascertaining income1 profit1 or loss in a report or statement to shareholders1 partners1 or other proprietors 7or to beneficiaries71 and shall be taken into account in the same period that such compensation cost is recognized for such purpose4 7#b7 ,special rules for controlled groups ,the ,secretary may prescribe rules for the application of paragraph 7#a7 in cases where the stock option is granted by-- 7,a7 a parent or subsidiary corporation 7within the meaning of section #dbd7 of the taxpayer1 or 7,b7 another corporation4 4 7b7 ,consistent treatment for research tax credit ,section #da7;b77#b77;,d7 is amended by inserting at the end the following new clause3 7iv7 ,special rule for stock options ,the amount which may be treated as wages for any taxable year in connection with the issuance of a stock option shall not exceed the amount allowed for such taxable year as a compensation deduction under section #afb7q7 with respect to such stock option4 4 7c7 ,application of amendments ,the amendments made by this section shall apply to stock options exercised after the date of the enactment of this ,act1 except that-- 7#a7 such amendments shall not apply to stock options that were granted before such date and that vested in taxable periods beginning on or before ,june #ae1 #bjje1 7#b7 for stock options that were granted before such date of enactment and vested during taxable periods beginning after ,june #ae1 #bjje1 and ending before such date of enactment1 a deduction under section #afb7q7 of the ,internal ,revenue ,code of #aihf 7as added by subsection 7a77#b77 shall be allowed in the first taxable period of the taxpayer that ends after such date of enactment1 7#c7 for public entities reporting as small business issuers and for non-public entities required to file public reports of financial condition1 paragraphs 7#a7 and 7#b7 shall be applied by substituting ,december #ae1 #bjje for ,june #ae1 #bjje1 and 7#d7 no deduction shall be allowed under section #hc7;h7 or section #afb7q7 of such ,code with respect to any stock option the vesting date of which is changed to accelerate the time at which the option may be exercised in order to avoid the applicability of such amendments4 #ccb4 ,application of executive pay deduction limit 7a7 ,in general ,subparagraph 7,d7 of section #afb7m77#d7 of the ,internal ,revenue ,code of #aihf is amended to read as follows3 7,d7 ,stock option compensation ,the term applicable employee remuneration shall include any compensation deducted under subsection 7q71 and such compensation shall not qualify as performance-based compensation under subparagraph 7,c74 4 7b7 ,effective date ,the amendment made by this section shall apply to stock options exercised or granted after the date of the enactment of this ,act4 ,c ,reduce ,deduction of ,corporate ,meals and ,entertainment #cda4 ,reduction in business meals and entertainment tax deduction 7a7 ,in general ,section #bgd7n77#a7 of the ,internal ,revenue ,code of #aihf 7relating to only #ej percent of meal and entertainment expenses allowed as deduction7 is amended by striking #ej percent and inserting #be percent4 7b7 ,conforming amendment ,section #bgd7n7 of the ,internal ,revenue ,code of #aihf is amended by striking paragraph 7#c74 7c7 ,clerical amendment ,the heading for section #bgd7n7 of the ,internal ,revenue ,code of #aihf is amended by striking ,only #ej ,percent and inserting ,only #be ,percent4 7d7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjab4 ,,iv ,close ,international ,tax ,system ,loopholes ,a ,reformation of ,u4,s4 international tax system #dja4 ,allocation of expenses and taxes on basis of repatriation of foreign income 7a7 ,in general ,part ,,iii of subchapter ,n of chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after subpart ,g the following new subpart3 ,h ,special ,rules for ,allocation of ,foreign-,related ,deductions and ,foreign ,tax ,credits ,sec4 #ige4 ,deductions allocated to deferred foreign income may not offset ,united ,states source income4 ,sec4 #igf4 ,amount of foreign taxes computed on overall basis4 ,sec4 #igg4 ,application of subpart4 #ige4 ,deductions allocated to deferred foreign income may not offset ,united ,states source income 7a7 ,current year deductions ,for purposes of this chapter1 foreign-related deductions for any taxable year-- 7#a7 shall be taken into account for such taxable year only to the extent that such deductions are allocable to currently-taxed foreign income1 and 7#b7 to the extent not so allowed1 shall be taken into account in subsequent taxable years as provided in subsection 7b74 ,foreign-related deductions shall be allocated to currently taxed foreign income in the same proportion which currently taxed foreign income bears to the sum of currently taxed foreign income and deferred foreign income4 7b7 ,deductions related to repatriated deferred foreign income 7#a7 ,in general ,if there is repatriated foreign income for a taxable year1 the portion of the previously deferred deductions allocated to the repatriated foreign income shall be taken into account for the taxable year as a deduction allocated to income from sources outside the ,united ,states4 ,any such amount shall not be included in foreign-related deductions for purposes of applying subsection 7a7 to such taxable year4 7#b7 ,portion of previously deferred deductions ,for purposes of paragraph 7#a71 the portion of the previously deferred deductions allocated to repatriated foreign income is-- 7,a7 the amount which bears the same proportion to such deductions1 as 7,b7 the repatriated income bears to the previously deferred foreign income4 7c7 ,definitions and special rule ,for purposes of this section-- 7#a7 ,foreign-related deductions ,the term foreign-related deductions means the total amount of deductions and expenses which would be allocated or apportioned to gross income from sources without the ,united ,states for the taxable year if both the currently-taxed foreign income and deferred foreign income were taken into account4 7#b7 ,currently-taxed foreign income ,the term currently-taxed foreign income means the amount of gross income from sources without the ,united ,states for the taxable year 7determined without regard to repatriated foreign income for such year74 7#c7 ,deferred foreign income ,the term deferred foreign income means the excess of-- 7,a7 the amount that would be includible in gross income under subpart ,f of this part for the taxable year if-- 7i7 all controlled foreign corporations were treated as one controlled foreign corporation1 and 7ii7 all earnings and profits of all controlled foreign corporations were subpart ,f income 7as defined in section #ieb71 over 7,b7 the sum of-- 7i7 all dividends received during the taxable year from controlled foreign corporations1 plus 7ii7 amounts includible in gross income under section #iea7;a74 7#d7 ,previously deferred foreign income ,the term previously deferred foreign income means the aggregate amount of deferred foreign income for all prior taxable years to which this part applies1 determined as of the beginning of the taxable year1 reduced by the repatriated foreign income for all such prior taxable years4 7#e7 ,repatriated foreign income ,the term repatriated foreign income means the amount included in gross income on account of distributions out of previously deferred foreign income4 7#f7 ,previously deferred deductions ,the term previously deferred deductions means the aggregate amount of foreign-related deductions not taken into account under subsection 7a7 for all prior taxable years 7determined as of the beginning of the taxable year71 reduced by any amounts taken into account under subsection 7b7 for such prior taxable years4 7#g7 ,treatment of certain foreign taxes 7,a7 ,paid by controlled foreign corporation ,section #gh shall not apply for purposes of determining currently-taxed foreign income and deferred foreign income4 7,b7 ,paid by taxpayer ,for purposes of determining currently-taxed foreign income1 gross income from sources without the ,united ,states shall be reduced by the aggregate amount of taxes described in the applicable paragraph of section #ija7;b7 which are paid by the taxpayer 7without regard to sections #ijb and #ifj7 during the taxable year4 7#h7 ,coordination with section #igf ,in determining currently-taxed foreign income and deferred foreign income1 the amount of deemed foreign tax credits shall be determined with regard to section #igf4 #igf4 ,amount of foreign taxes computed on overall basis 7a7 ,current year allowance ,for purposes of this chapter1 the amount taken into account as foreign income taxes for any taxable year shall be an amount which bears the same ratio to the total foreign income taxes for that taxable year as-- 7#a7 the currently-taxed foreign income for such taxable year1 bears to 7#b7 the sum of the currently-taxed foreign income and deferred foreign income for such year4 ,the portion of the total foreign income taxes for any taxable year not taken into account under the preceding sentence for a taxable year shall only be taken into account as provided in subsection 7b7 7and shall not be taken into account for purposes of applying sections #ijb and #ifj74 7b7 ,allowance related to repatriated deferred foreign income 7#a7 ,in general ,if there is repatriated foreign income for any taxable year1 the portion of the previously deferred foreign income taxes paid or accrued during such taxable year shall be taken into account for the taxable year as foreign taxes paid or accrued4 ,any such taxes so taken into account shall not be included in foreign income taxes for purposes of applying subsection 7a7 to such taxable year4 7#b7 ,portion of previously deferred foreign income taxes ,for purposes of paragraph 7#a71 the portion of the previously deferred foreign income taxes allocated to repatriated deferred foreign income is-- 7,a7 the amount which bears the same proportion to such taxes1 as 7,b7 the repatriated deferred income bears to the previously deferred foreign income4 7c7 ,definitions and special rule ,for purposes of this section-- 7#a7 ,previously deferred foreign income taxes ,the term previously deferred foreign income taxes means the aggregate amount of total foreign income taxes not taken into account under subsection 7a7 for all prior taxable years 7determined as of the beginning of the taxable year71 reduced by any amounts taken into account under subsection 7b7 for such prior taxable years4 7#b7 ,total foreign income taxes ,the term total foreign income taxes means the sum of foreign income taxes paid or accrued during the taxable year 7determined without regard to section #ijd7;c77 plus the increase in foreign income taxes that would be paid or accrued during the taxable year under sections #ijb and #ifj if-- 7,a7 all controlled foreign corporations were treated as one controlled foreign corporation1 and 7,b7 all earnings and profits of all controlled foreign corporations were subpart ,f income 7as defined in section #ieb74 7#c7 ,foreign income taxes ,the term foreign income taxes means any income1 war profits1 or excess profits taxes paid by the taxpayer to any foreign country or possession of the ,united ,states4 7#d7 ,currently-taxed foreign income and deferred foreign income ,the terms currently-taxed foreign income and deferred foreign income have the meanings given such terms by section #ige7;c774 #igg4 ,application of subpart ,this subpart-- 7#a7 shall be applied before subpart ,a1 and 7#b7 shall be applied separately with respect to the categories of income specified in section #ijd7;d77#a74 4 7b7 ,clerical amendment ,the table of subparts for part ,,iii of subpart ,n of chapter #a of such ,code is amended by inserting after the item relating to subpart ,g the following new item3 ,subpart ,h4 ,special ,rules for ,allocation of ,foreign-,related ,deductions and ,foreign ,tax ,credits4 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 #djb4 ,excess income from transfers of intangibles to low-taxed affiliates treated as subpart ,f income 7a7 ,in general ,subsection 7a7 of section #ied of such ,code is amended by inserting after paragraph 7#c7 the following new paragraph3 7#d7 the foreign base company excess intangible income for the taxable year 7determined under subsection 7f7 and reduced as provided in subsection 7b77#e771 and 4 7b7 ,foreign base company excess intangible income ,section #ied of such ,code is amended by inserting after subsection 7e7 the following new subsection3 7f7 ,foreign base company excess intangible income ,for purposes of subsection 7a77#d7 and this subsection3 7#a7 ,foreign base company excess intangible income defined 7,a7 ,in general ,the term foreign base company excess intangible income means1 with respect to any covered intangible1 the excess of-- 7i7 the sum of-- 7,i7 gross income from the sale1 lease1 license1 or other disposition of property in which such covered intangible is used directly or indirectly1 and 7,,ii7 gross income from the provision of services related to such covered intangible or in connection with property in which such covered intangible is used directly or indirectly1 over 7ii7 #aej percent of the costs properly allocated and apportioned to the gross income taken into account under clause 7i7 other than expenses for interest and taxes and any expenses which are not directly allocable to such gross income4 7,b7 ,same country income not taken into account ,if-- 7i7 the sale1 lease1 license1 or other disposition of the property referred to in subparagraph 7,a77i77,i7 is for use1 consumption1 or disposition in the country under the laws of which the controlled foreign corporation is created or organized1 or 7ii7 the services referred to in subparagraph 7,a77i77,,ii7 are performed in such country1 the gross income from such sale1 lease1 license1 or other disposition1 or provision of services1 shall not be taken into account under subparagraph 7,a77i74 7#b7 ,exception based on effective foreign income tax rate 7,a7 ,in general ,foreign base company excess intangible income shall not include the applicable percentage of any item of income received by a controlled foreign corporation if the taxpayer establishes to the satisfaction of the ,secretary that such income was subject to an effective rate of income tax imposed by a foreign country in excess of #e percent4 7,b7 ,applicable percentage ,for purposes of subparagraph 7,a71 the term applicable percentage means the ratio 7expressed as a percentage71 not greater than #ajj percent1 of-- 7i7 the number of percentage points by which the effective rate of income tax referred to in subparagraph 7,a7 exceeds #e percentage points1 over 7ii7 #aj percentage points4 7,c7 ,treatment of losses in determining effective rate of foreign income tax ,for purposes of determining the effective rate of income tax imposed by any foreign country-- 7i7 such effective rate shall be determined without regard to any losses carried to the relevant taxable year1 and 7ii7 to the extent the income with respect to such intangible reduces losses in the relevant taxable year1 such effective rate shall be treated as being the effective rate which would have been imposed on such income without regard to such losses4 7#c7 ,covered intangible ,the term covered intangible means1 with respect to any controlled foreign corporation1 any intangible property 7as defined in section #icf7;h77#c77;,b77-- 7,a7 which is sold1 leased1 licensed1 or otherwise transferred 7directly or indirectly7 to such controlled foreign corporation from a related person1 or 7,b7 with respect to which such controlled foreign corporation and one or more related persons has 7directly or indirectly7 entered into any shared risk or development agreement 7including any cost sharing agreement74 7#d7 ,related person ,the term related person has the meaning given such term in subsection 7d77#c74 4 7c7 ,separate basket for foreign tax credit ,subsection 7d7 of section #ijd of such ,code is amended by redesignating paragraph 7#g7 as paragraph 7#h7 and by inserting after paragraph 7#f7 the following new paragraph3 7#f7 ,separate application to foreign base company excess intangible income 7,a7 ,in general ,subsections 7a71 7b71 and 7c7 of this section and sections #ijb1 #ijg1 and #ifj shall be applied separately with respect to each item of income which is taken into account under section #ied7;a77#d7 as foreign base company excess intangible income4 7,b7 ,regulations ,the ,secretary may issue such regulations or other guidance as is necessary or appropriate to carry out the purposes of this subsection1 including regulations or other guidance which provides that related items of income may be aggregated for purposes of this paragraph4 4 7d7 ,conforming amendments 7#a7 ,paragraph 7#d7 of section #ied7;b7 of such ,code is amended by inserting foreign base company excess intangible income described in subsection 7a77#d7 or before foreign base company oil-related income in the last sentence thereof4 7#b7 ,subsection 7b7 of section #ied of such ,code is amended by adding at the end the following new paragraph3 7#g7 ,foreign base company excess intangible income not treated as another kind of base company income ,income of a corporation which is foreign base company excess intangible income shall not be considered foreign base company income of such corporation under paragraph 7#b71 7#c71 or 7#e7 of subsection 7a74 4 7e7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 #djc4 ,limitations on income shifting through intangible property transfers 7a7 ,clarification of definition of intangible asset ,clause 7vi7 of section #icf7;h77#c77;,b7 of such ,code is amended by inserting 7including any section #aig intangible described in subparagraph 7,a71 7,b71 or 7,c77i7 of subsection 7d77#a7 of such section7 after item4 7b7 ,clarification of allowable valuation methods 7#a7 ,foreign corporations ,paragraph 7#b7 of section #cfg7;d7 of such ,code is amended by adding at the end the following new subparagraph3 7,d7 ,regulatory authority ,for purposes of the last sentence of subparagraph 7,a71 the ,secretary may require-- 7i7 the valuation of transfers of intangible property on an aggregate basis1 or 7ii7 the valuation of such a transfer on the basis of the realistic alternatives to such a transfer1 in any case in which the ,secretary determines that such basis is the most reliable means of valuation of such transfers4 4 7#b7 ,allocation among taxpayers ,section #dhb of such ,code is amended by adding at the end the following3 ,for purposes of the preceding sentence1 the ,secretary may require the valuation of transfers of intangible property on an aggregate basis or the valuation of such a transfer on the basis of the realistic alternatives to such a transfer1 in any case in which the ,secretary determines that such basis is the most reliable means of valuation of such transfers44 7c7 ,effective date 7#a7 ,in general ,the amendments made by this section shall apply to transfers in taxable years beginning after the date of the enactment of this ,act4 7#b7 ,no inference ,nothing in the amendment made by subsection 7a7 shall be construed to create any inference with respect to the application of section #icf7;h77#c7 of the ,internal ,revenue ,code of #aihf1 or the authority of the ,secretary of the ,treasury to provide regulations for such application1 on or before the date of the enactment of such amendment4 #djd4 ,limitation on earnings stripping by expatriated entities 7a7 ,in general ,subsection 7j7 of section #afc of such ,code is amended-- 7#a7 by redesignating paragraph 7#i7 as paragraph 7#aj71 and 7#b7 by inserting after paragraph 7#h7 the following new paragraph3 7#i7 ,special rules for expatriated entities 7,a7 ,in general ,in the case of a corporation to which this subsection applies which is an expatriated entity1 this subsection shall apply to such corporation with the following modifications3 7i7 ,paragraph 7#b77;,a7 shall be applied without regard to clause 7ii7 thereof4 7ii7 ,paragraph 7#a77;,b7 shall be applied-- 7,i7 without regard to the parenthetical1 and 7,,ii7 by substituting in the #ast succeeding taxable year and in the #bnd through #ajth succeeding taxable years to the extent not previously taken into account under this subparagraph for in the succeeding taxable year4 7iii7 ,paragraph 7#b77;,b7 shall be applied-- 7,i7 without regard to clauses 7ii7 and 7iii71 and 7,,ii7 by substituting #be percent of the adjusted taxable income of the corporation for such taxable year for the matter of clause 7i77,,ii7 thereof4 7,b7 ,expatriated entity ,for purposes of this paragraph-- 7i7 ,in general ,with respect to a corporation and a taxable year1 the term expatriated entity has the meaning given such term by section #ghgd7;a77#b71 determined as if such section and the regulations under such section as in effect on the first day of such taxable year applied to all taxable years of the corporation beginning after ,july #aj1 #aihi4 7ii7 ,exception for surrogates treated as a domestic corporation ,the term expatriated entity does not include a surrogate foreign corporation which is treated as a domestic corporation by reason of section #ghgd7;b74 4 7b7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 #dje4 ,prevention of avoidance of tax through reinsurance with non-taxed affiliates 7a7 ,in general ,part ,,iii of subchapter ,l of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #hdi4 ,special rules for reinsurance of non-life contracts with non-taxed affiliates 7a7 ,in general ,the taxable income under section #hca7;a7 or the life insurance company taxable income under section #hja7;b7 7as the case may be7 of an insurance company shall be determined by not taking into account-- 7#a7 any non-taxed reinsurance premium1 7#b7 any additional amount paid by such insurance company with respect to the reinsurance for which such non-taxed reinsurance premium is paid1 to the extent such additional amount is properly allocable to such non-taxed reinsurance premium1 and 7#c7 any return premium1 ceding commission1 reinsurance recovered1 or other amount received by such insurance company with respect to the reinsurance for which such non-taxed reinsurance premium is paid1 to the extent such return premium1 ceding commission1 reinsurance recovered1 or other amount is properly allocable to such non-taxed reinsurance premium4 7b7 ,non-,taxed reinsurance premiums ,for purposes of this section-- 7#a7 ,in general ,the term non-taxed reinsurance premium means any reinsurance premium paid directly or indirectly to an affiliated corporation with respect to reinsurance of risks 7other than excepted risks71 to the extent that the income attributable to the premium is not subject to tax under this subtitle 7either as the income of the affiliated corporation or as amounts included in gross income by a ,united ,states shareholder under section #iea74 7#b7 ,excepted risks ,the term excepted risks means any risk with respect to which reserves described in section #haf7;b77#a7 are established4 7c7 ,affiliated corporations ,for purposes of this section1 a corporation shall be treated as affiliated with an insurance company if both corporations would be members of the same controlled group of corporations 7as defined in section #aefc7;a77 if section #aefc were applied-- 7#a7 by substituting at least #ej percent for at least #hj percent each place it appears in subsection 7a77#a71 and 7#b7 without regard to subsections 7a77#d71 7b77#b77;,c71 7b77#b77;,d71 and 7e77#c77;,c74 7d7 ,election ,to treat reinsurance income as effectively connected 7#a7 ,in general ,a specified affiliated corporation may elect for any taxable year to treat specified reinsurance income as-- 7,a7 income effectively connected with the conduct of a trade or business in the ,united ,states1 and 7,b7 for purposes of any treaty between the ,united ,states and any foreign country1 income attributable to a permanent establishment in the ,united ,states4 7#b7 ,effect of election ,in the case of any specified reinsurance income with respect to which the election under this subsection applies-- 7,a7 ,deduction allowed for reinsurance premiums ,for exemption from subsection 7a71 see definition of non-taxed reinsurance premiums in subsection 7b74 7,b7 ,exception from excise tax ,the tax imposed by section #dcga shall not apply with respect to any income treated as effectively connected with the conduct of a trade or business in the ,united ,states under paragraph 7#a74 7,c7 ,taxation under this subchapter ,such income shall be subject to tax under this subchapter to the same extent and in the same manner as if such income were the income of a domestic insurance company4 7,d7 ,coordination with foreign tax credit provisions ,for purposes of subpart ,a of part ,,iii of subchapter ,n and sections #gh and #ifj-- 7i7 such specified reinsurance income shall be treated as derived from sources without the ,united ,states1 and 7ii7 subsections 7a71 7b71 and 7c7 of section #ijd and sections #ijb1 #ijg1 and #ifj shall be applied separately with respect to each item of such income4 ,the ,secretary may issue regulations or other guidance which provide that related items of specified reinsurance income may be aggregated for purposes of applying clause 7ii74 7#c7 ,specified affiliated corporation ,for purposes of this subsection1 the term specified affiliated corporation means any affiliated corporation which is a foreign corporation and which meets such requirements as the ,secretary shall prescribe to ensure that tax on the specified reinsurance income of such corporation is properly determined and paid4 7#d7 ,specified reinsurance income ,for purposes of this paragraph1 the term specified reinsurance income means all income of a specified affiliated corporation which is attributable to reinsurance with respect to which subsection 7a7 would 7but for the election under this subsection7 apply4 7#e7 ,rules related to election ,any election under paragraph 7#a7 shall-- 7,a7 be made at such time and in such form and manner as the ,secretary may provide1 and 7,b7 apply for the taxable year for which made and all subsequent taxable years unless revoked with the consent of the ,secretary4 7e7 ,regulations ,the ,secretary shall prescribe such regulations or other guidance as may be appropriate to carry out1 or to prevent the avoidance of the purposes of1 this section1 including regulations or other guidance which provide for the application of this section to alternative reinsurance transactions1 fronting transactions1 conduit and reciprocal transactions1 and any economically equivalent transactions4 4 7b7 ,clerical amendment ,the table of sections for part ,,iii of subchapter ,l of chapter #a of such ,code is amended by adding at the end the following new item3 ,sec4 #hdi4 ,special rules for reinsurance of non-life contracts with non-taxed affiliates4 4 7c7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after ,december #ca1 #bjab4 ,b ,reinsurance #daa4 ,prevention of avoidance of tax through reinsurance with non-taxed affiliates 7a7 ,in general ,part ,,iii of subchapter ,l of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #hdi4 ,special rules for reinsurance of non-life contracts with non-taxed affiliates 7a7 ,in general ,the taxable income under section #hca7;a7 or the life insurance company taxable income under section #hja7;b7 7as the case may be7 of an insurance company shall be determined by not taking into account-- 7#a7 any non-taxed reinsurance premium1 7#b7 any additional amount paid by such insurance company with respect to the reinsurance for which such non-taxed reinsurance premium is paid1 to the extent such additional amount is properly allocable to such non-taxed reinsurance premium1 and 7#c7 any return premium1 ceding commission1 reinsurance recovered1 or other amount received by such insurance company with respect to the reinsurance for which such non-taxed reinsurance premium is paid1 to the extent such return premium1 ceding commission1 reinsurance recovered1 or other amount is properly allocable to such non-taxed reinsurance premium4 7b7 ,non-,taxed reinsurance premiums ,for purposes of this section-- 7#a7 ,in general ,the term non-taxed reinsurance premium means any reinsurance premium paid directly or indirectly to an affiliated corporation with respect to reinsurance of risks 7other than excepted risks71 to the extent that the income attributable to the premium is not subject to tax under this subtitle 7either as the income of the affiliated corporation or as amounts included in gross income by a ,united ,states shareholder under section #iea74 7#b7 ,excepted risks ,the term excepted risks means any risk with respect to which reserves described in section #haf7;b77#a7 are established4 7c7 ,affiliated corporations ,for purposes of this section1 a corporation shall be treated as affiliated with an insurance company if both corporations would be members of the same controlled group of corporations 7as defined in section #aefc7;a77 if section #aefc were applied-- 7#a7 by substituting at least #ej percent for at least #hj percent each place it appears in subsection 7a77#a71 and 7#b7 without regard to subsections 7a77#d71 7b77#b77;,c71 7b77#b77;,d71 and 7e77#c77;,c74 7d7 ,election ,to treat reinsurance income as effectively connected 7#a7 ,in general ,a specified affiliated corporation may elect for any taxable year to treat specified reinsurance income as-- 7,a7 income effectively connected with the conduct of a trade or business in the ,united ,states1 and 7,b7 for purposes of any treaty between the ,united ,states and any foreign country1 income attributable to a permanent establishment in the ,united ,states4 7#b7 ,effect of election ,in the case of any specified reinsurance income with respect to which the election under this subsection applies-- 7,a7 ,deduction allowed for reinsurance premiums ,for exemption from subsection 7a71 see definition of non-taxed reinsurance premiums in subsection 7b74 7,b7 ,exception from excise tax ,the tax imposed by section #dcga shall not apply with respect to any income treated as effectively connected with the conduct of a trade or business in the ,united ,states under paragraph 7#a74 7,c7 ,taxation under this subchapter ,such income shall be subject to tax under this subchapter to the same extent and in the same manner as if such income were the income of a domestic insurance company4 7,d7 ,coordination with foreign tax credit provisions ,for purposes of subpart ,a of part ,,iii of subchapter ,n and sections #gh and #ifj-- 7i7 such specified reinsurance income shall be treated as derived from sources without the ,united ,states1 and 7ii7 subsections 7a71 7b71 and 7c7 of section #ijd and sections #ijb1 #ijg1 and #ifj shall be applied separately with respect to each item of such income4 ,the ,secretary may issue regulations or other guidance which provide that related items of specified reinsurance income may be aggregated for purposes of applying clause 7ii74 7#c7 ,specified affiliated corporation ,for purposes of this subsection1 the term specified affiliated corporation means any affiliated corporation which is a foreign corporation and which meets such requirements as the ,secretary shall prescribe to ensure that tax on the specified reinsurance income of such corporation is properly determined and paid4 7#d7 ,specified reinsurance income ,for purposes of this paragraph1 the term specified reinsurance income means all income of a specified affiliated corporation which is attributable to reinsurance with respect to which subsection 7a7 would 7but for the election under this subsection7 apply4 7#e7 ,rules related to election ,any election under paragraph 7#a7 shall-- 7,a7 be made at such time and in such form and manner as the ,secretary may provide1 and 7,b7 apply for the taxable year for which made and all subsequent taxable years unless revoked with the consent of the ,secretary4 7e7 ,regulations ,the ,secretary shall prescribe such regulations or other guidance as may be appropriate to carry out1 or to prevent the avoidance of the purposes of1 this section1 including regulations or other guidance which provide for the application of this section to alternative reinsurance transactions1 fronting transactions1 conduit and reciprocal transactions1 and any economically equivalent transactions4 4 7b7 ,clerical amendment ,the table of sections for part ,,iii of subchapter ,l of chapter #a of such ,code is amended by adding at the end the following new item3 ,sec4 #hdi4 ,special rules for reinsurance of non-life contracts with non-taxed affiliates4 4 7c7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after ,december #ca1 #bjab4 ,c ,close loophole for corporate jet depreciation #dba4 ,general aviation aircraft treated as #g-year property 7a7 ,in general ,subparagraph 7,c7 of section #afh7;e77#c7 of the ,internal ,revenue ,code of #aihf 7relating to classification of certain property7 is amended by striking and at the end of clause 7iv71 by redesignating clause 7v7 as clause 7vi71 and by inserting after clause 7iv7 the following new clause3 7v7 any general aviation aircraft1 and 4 7b7 ,class life ,paragraph 7#c7 of section #afh7;g7 ,internal ,revenue ,code of #aihf is amended by inserting after subparagraph 7,e7 the following new subparagraph3 7,f7 ,general aviation aircraft4 ,in the case of any general aviation aircraft1 the recovery period used for purposes of paragraph 7#b7 shall be #ab years4 4 7c7 ,general aviation aircraft ,subsection 7i7 of section #afh ,internal ,revenue ,code of #aihf is amended by inserting after paragraph 7#ai7 the following new paragraph3 7#bj7 ,general aviation aircraft ,the term general aviation aircraft means any airplane or helicopter 7including airframes and engines7 not used in commercial or contract carrying of passengers or freight1 but which primarily engages in the carrying of passengers4 4 7d7 ,effective date ,this section shall be effective for property placed in service after ,december #ca1 #bjab4 ,v ,close ,estate ,tax ,loopholes #eja4 ,valuation rules for certain transfers of nonbusiness assets2 limitation on minority discounts 7a7 ,in general ,section #bjca of the ,internal ,revenue ,code of #aihf is amended by redesignating subsection 7d7 as subsection 7f7 and by inserting after subsection 7c7 the following new subsections3 7d7 ,valuation rules for certain transfers of nonbusiness assets ,for purposes of this chapter and chapter #ab-- 7#a7 ,in general ,in the case of the transfer of any interest in an entity other than an interest which is actively traded 7within the meaning of section #ajib7-- 7,a7 the value of any nonbusiness assets held by the entity shall be determined as if the transferor had transferred such assets directly to the transferee 7and no valuation discount shall be allowed with respect to such nonbusiness assets71 and 7,b7 the nonbusiness assets shall not be taken into account in determining the value of the interest in the entity4 7#b7 ,nonbusiness assets ,for purposes of this subsection-- 7,a7 ,in general ,the term nonbusiness asset means any asset which is not used in the active conduct of #a or more trades or businesses4 7,b7 ,exception for certain passive assets ,except as provided in subparagraph 7,c71 a passive asset shall not be treated for purposes of subparagraph 7,a7 as used in the active conduct of a trade or business unless-- 7i7 the asset is property described in paragraph 7#a7 or 7#d7 of section #abba7;a7 or is a hedge with respect to such property1 or 7ii7 the asset is real property used in the active conduct of #a or more real property trades or businesses 7within the meaning of section #dfi7;c77#g77;,c77 in which the transferor materially participates and with respect to which the transferor meets the requirements of section #dfi7;c77#g77;,b77ii74 ,for purposes of clause 7ii71 material participation shall be determined under the rules of section #dfi7;h71 except that section #dfi7;h77#c7 shall be applied without regard to the limitation to farming activity4 7,c7 ,exception for working capital ,any asset 7including a passive asset7 which is held as a part of the reasonably required working capital needs of a trade or business shall be treated as used in the active conduct of a trade or business4 7#c7 ,passive asset ,for purposes of this subsection1 the term passive asset means any-- 7,a7 cash or cash equivalents1 7,b7 except to the extent provided by the ,secretary1 stock in a corporation or any other equity1 profits1 or capital interest in any entity1 7,c7 evidence of indebtedness1 option1 forward or futures contract1 notional principal contract1 or derivative1 7,d7 asset described in clause 7iii71 7iv71 or 7v7 of section #cea7;e77#a77;,b71 7,e7 annuity1 7,f7 real property used in #a or more real property trades or businesses 7as defined in section #dfi7;c77#g77;,c771 7,g7 asset 7other than a patent1 trademark1 or copyright7 which produces royalty income1 7,h7 commodity1 7,i7 collectible 7within the meaning of section #dja7m771 or 7,j7 any other asset specified in regulations prescribed by the ,secretary4 7#d7 ,look-thru rules 7,a7 ,in general ,if a nonbusiness asset of an entity consists of a #aj-percent interest in any other entity1 this subsection shall be applied by disregarding the #aj-percent interest and by treating the entity as holding directly its ratable share of the assets of the other entity4 ,this subparagraph shall be applied successively to any #aj-percent interest of such other entity in any other entity4 7,b7 #aj-percent interest ,the term #aj-percent interest means-- 7i7 in the case of an interest in a corporation1 ownership of at least #aj percent 7by vote or value7 of the stock in such corporation1 7ii7 in the case of an interest in a partnership1 ownership of at least #aj percent of the capital or profits interest in the partnership1 and 7iii7 in any other case1 ownership of at least #aj percent of the beneficial interests in the entity4 7,c7 ,exception for actively traded interests ,subparagraph 7,a7 shall not apply to any nonbusiness asset which consists of an interest which is actively traded 7within the meaning of section #ajib74 7#e7 ,coordination with subsection 7b7 ,subsection 7b7 shall apply after the application of this subsection4 7e7 ,limitation on minority discounts ,for purposes of this chapter and chapter #ab1 in the case of the transfer of any interest in an entity other than an interest which is actively traded 7within the meaning of section #ajib71 no discount shall be allowed by reason of the fact that the transferee does not have control of such entity if the transferee and members of the family 7as defined in section #bjcb;,a7e77#b77 of the transferee have control of such entity 7determined immediately after such transfer74 4 7b7 ,effective date ,the amendments made by this section shall apply to transfers after the date of the enactment of this ,act4 #ejb4 ,consistent basis reporting between estate and person acquiring property from decedent 7a7 ,consistent use of basis 7#a7 ,property acquired from a decedent ,section #ajad of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7f7 ,basis must be consistent with estate tax return 7#a7 ,in general ,for purposes of this section1 the value used to determine the basis of any interest in property in the hands of the person acquiring such property shall not exceed the value of such interest as finally determined for purposes of chapter #aa4 7#b7 ,special rule where no final determination ,in any case in which the final value of property has not been determined under chapter #aa and there has been a statement furnished under section #fjce7;a71 the value used to determine the basis of any interest in property in the hands of the person acquiring such property shall not exceed the amount reported on any statement furnished under section #fjce7;a74 7#c7 ,regulations ,the ,secretary may by regulations provide exceptions to the application of this subsection4 4 7#b7 ,property acquired by gifts and transfers in trust ,section #ajae of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7f7 ,basis must be consistent gift tax return 7#a7 ,in general ,for purposes of this section1 the value used to determine the basis of any interest in property in the hands of the person acquiring such property shall not exceed the value of such interest as finally determined for purposes of chapter #ab4 7#b7 ,special rule where no final determination ,in any case in which the final value of property has not been determined under chapter #ab and there has been a statement furnished under section #fjce7;b71 the value used to determine the basis of any interest in property in the hands of the person acquiring such property shall not exceed the amount reported on any statement furnished under section #fjce7;b74 7#c7 ,regulations ,the ,secretary may by regulations provide exceptions to the application of this subsection4 4 7b7 ,information reporting 7#a7 ,in general ,subpart ,a of part ,,iii of subchapter ,a of chapter #fa of the ,internal ,revenue ,code of #aihf is amended by inserting after section #fjcd;,a the following new section3 #fjce4 ,basis information to persons acquiring property from decedent or by gift 7a7 ,information with respect to property acquired from decedents 7#a7 ,in general ,the executor of any estate required to file a return under section #fjah7;a7 shall furnish to the ,secretary and to each person acquiring any interest in property included in the decedent's gross estate for ,federal estate tax purposes a statement identifying the value of each interest in such property as reported on such return and such other information with respect to such interest as the ,secretary may prescribe4 7#b7 ,statements by beneficiaries ,each person required to file a return under section #fjah7;b7 shall furnish to the ,secretary and to each other person who holds a legal or beneficial interest in the property to which such return relates a statement identifying the information described in paragraph 7#a74 7#c7 ,time for furnishing statement 7,a7 ,in general ,each statement required to be furnished under paragraph 7#a7 or 7#b7 shall be furnished at such time as the ,secretary may prescribe1 but in no case at a time later than the earlier of-- 7i7 the date which is #cj days after the date on which the return under section #fjah was required to be filed 7including extensions1 if any71 or 7ii7 the date which is #cj days after the date such return is filed4 7,b7 ,adjustments ,in any case in which there is an adjustment to the information required to be included on a statement filed under paragraph 7#a7 or 7#b7 after such statement has been filed1 a supplemental statement under such paragraph shall be filed not later than the date which is #cj days after such adjustment is made4 7b7 ,information with respect to property acquired by gift 7#a7 ,in general ,each person making a transfer by gift who is required to file a return under section #fjai with respect to such transfer shall furnish to the ,secretary and to each person acquiring any interest in property by reason of such transfer a statement identifying the value of each interest in such property as reported on such return and such other information with respect to such interest as the ,secretary may prescribe4 7#b7 ,time for furnishing statement 7,a7 ,in general ,each statement required to be furnished under paragraph 7#a7 shall be furnished at such time as the ,secretary may prescribe1 but in no case at a time later than the earlier of-- 7i7 the date which is #cj days after the date on which the return under section #fjai was required to be filed 7including extensions1 if any71 or 7ii7 the date which is #cj days after the date such return is filed4 7,b7 ,adjustments ,in any case in which there is an adjustment to the information required to be included on a statement filed under paragraph 7#a7 after such statement has been filed1 a supplemental statement under such paragraph shall be filed not later than the date which is #cj days after such adjustment is made4 7c7 ,regulations ,the ,secretary shall prescribe such regulations as necessary to carry out this section1 including regulations relating to-- 7#a7 the application of this section to property with regard to which no estate or gift tax return is required to be filed1 and 7#b7 situations in which the surviving joint tenant or other recipient may have better information than the executor regarding the basis or fair market value of the property4 4 7#b7 ,penalty for failure to file 7,a7 ,return ,section #fgbd7;d77#a7 of the ,internal ,revenue ,code of #aihf is amended by striking and at the end of subparagraph 7,b71 by striking the period at the end of subparagraph 7,c7 and inserting 1 and1 and by adding at the end the following new subparagraph3 7,d7 any statement required to be filed with the ,secretary under section #fjce4 4 7,b7 ,statement ,section #fgbd7;d77#b7 of such ,code is amended by striking or at the end of subparagraph 7,,gg71 by striking the period at the end of subparagraph 7,,hh7 and inserting 1 or1 and by adding at the end the following new subparagraph3 7,,ii7 section #fjce 7other than a statement described in paragraph 7#a77;,d774 4 7#c7 ,clerical amendment ,the table of sections for subpart ,a of part ,,iii of subchapter ,a of chapter #fa of the ,internal ,revenue ,code of #aihf is amended by inserting after the item relating to section #fjcd;,a the following new item3 ,sec4 #fjce4 ,basis information to persons acquiring property from decedent or by gift4 4 7c7 ,penalty for inconsistent reporting 7#a7 ,in general ,subsection 7b7 of section #fffb of the ,internal ,revenue ,code of #aihf is amended by inserting after paragraph 7#g7 the following new paragraph3 7#h7 ,any inconsistent estate or gift basis4 4 7#b7 ,inconsistent basis reporting ,section #fffb of such ,code is amended by adding at the end the following new subsection3 7k7 ,inconsistent estate or gift basis reporting ,for purposes of this section1 the term inconsistent estate or gift basis means the portion of the understatement which is attributable to-- 7#a7 in the case of property acquired from a decedent1 a basis determination with respect to such property which is not consistent with the value of such property as determined under section #ajad7;f71 and 7#b7 in the case of property acquired by gift1 a basis determination with respect to such property which is not consistent with the value of such property as determined under section #ajae7;f74 4 7d7 ,effective date ,the amendments made by this section shall apply to transfers for which returns are filed after the date of the enactment of this ,act4 #ejc4 ,required minimum #aj-year term1 etc41 for grantor retained annuity trusts 7a7 ,in general ,subsection 7b7 of section #bgjb of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by redesignating paragraphs 7#a71 7#b7 and 7#c7 as subparagraphs 7,a71 7,b71 and 7,c71 respectively1 and by moving such subparagraphs 7as so redesignated7 #b ems to the right2 7#b7 by striking ,for purposes of and inserting the following3 7#a7 ,in general ,for purposes of 2 7#c7 by striking paragraph 7#a7 or 7#b7 in paragraph 7#a77;,c7 7as so redesignated7 and inserting subparagraph 7,a7 or 7,b72 and 7#d7 by adding at the end the following new paragraph3 7#b7 ,additional requirements with respect to grantor retained annuities ,for purposes of subsection 7a71 in the case of an interest described in paragraph 7#a77;,a7 7determined without regard to this paragraph7 which is retained by the transferor1 such interest shall be treated as described in such paragraph only if-- 7,a7 the right to receive the fixed amounts referred to in such paragraph is for a term of not less than #aj years1 7,b7 such fixed amounts1 when determined on an annual basis1 do not decrease relative to any prior year during the first #aj years of the term referred to in subparagraph 7,a71 and 7,c7 the remainder interest has a value greater than zero determined as of the time of the transfer4 4 7b7 ,effective date ,the amendments made by this section shall apply to transfers made after the date of the enactment of this ,act4 #ejd4 ,limitation on ,,gst exemption of perpetual dynasty trusts 7a7 ,in general ,section #bfdb of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7h7 ,expiration of ,,gst exemption #ij years after establishment of trust 7#a7 ,in general ,in the case of any generation-skipping transfer made from a trust after the date which is #ij years after the date on which such trust is created1 the inclusion ratio with respect to any property transferred in such transfer shall be #a4 7#b7 ,special rules ,for purposes of this subsection-- 7,a7 ,date of creation of certain deemed separate trusts ,in the case of any portion of a trust which is treated as a separate trust under section #bfed7;b77#a71 such separate trust shall be treated as created on the date of the first transfer described in such section with respect to such separate trust4 7,b7 ,date of creation of pour-over trusts ,in the case of any generation-skipping transfer of property which involves the transfer of property from #a trust to another trust1 the date of the creation of the transferee trust shall be treated as being the earlier of-- 7i7 the date of the creation of such transferee trust1 or 7ii7 the date of the creation of the transferor trust4 ,in the case of multiple transfers to which the preceding sentence applies1 the date of the creation of the transferor trust shall be determined under the preceding sentence before the application of the preceding sentence to determine the date of the creation of the transferee trust4 7,c7 ,exception for certain transfers for education and medical expenses ,subparagraph 7,b7 shall not apply to the transfer of property from #a trust to another trust if-- 7i7 such transfer is described in section #bfdb7;c77#b71 and 7ii7 the individual referred to in such section with respect to the transferee trust was also a beneficiary of the transferor trust4 7#c7 ,regulations ,the ,secretary may prescribe such regulations or other guidance as may be necessary or appropriate to carry out this subsection4 4 7b7 ,effective date 7#a7 ,in general ,the amendments made this section shall apply to-- 7,a7 trusts created after the date of the enactment of this ,act1 and 7,b7 generation-skipping transfers made from trusts created on or before such date1 but only to the extent such transfer is made out of corpus added to the trust after such date 7or out of income attributable to corpus so added74 7#b7 ,determination of date of creation ,for purposes of this subsection1 the rules of sections #bfdb7;h77#b7 7as added by this section7 and #bfed7;b7 of the ,internal ,revenue ,code of #aihf shall apply for purposes of determining the date of the creation of any trust4 7#c7 ,exceptions ,the ,secretary of the ,treasury1 or his designee1 shall issue regulations or other guidance which provide exceptions to the application of the amendments made by this section which are substantially similar to the relevant exceptions under paragraph 7#b7 of section #adcc7;b7 of the ,tax ,reform ,act of #aihf4 ,,vi ,cut ,pentagon ,waste to ,achieve ,balance ,a ,smarter ,approach to nuclear ,expenditures #fja4 ,short title ,this title may be cited as the ,smarter ,approach to ,nuclear ,expenditures ,act4 #fjb4 ,findings ,congress finds the following3 7#a7 ,the ,berlin ,wall fell in #aihi1 the ,u4,s4,s4,r4 no longer exists1 and the ,cold ,war is over4 ,the nature of threats to the national security and military interests of the ,united ,states has changed4 ,however1 the ,united ,states continues to maintain an enormous arsenal of nuclear weapons and delivery systems that were devised with the ,cold ,war in mind4 7#b7 ,the current nuclear arsenal of the ,united ,states includes approximately #e1jjj total nuclear warheads1 of which approximately #b1jjj are deployed with three delivery components3 long-range strategic bomber aircraft1 land-based intercontinental ballistic missiles1 and submarine-launched ballistic missiles4 ,the bomber fleet of the ,united ,states comprises #ic ,b-#eb and #bj ,b-#b aircraft4 ,the ,united ,states maintains #dej intercontinental ballistic missiles4 ,the ,united ,states also maintains #ad ,ohio-class submarines1 up to #ab of which are deployed at sea4 ,each of these submarines is armed with up to #if independently targetable nuclear warheads4 7#c7 ,this ,cold ,war-based approach to nuclear security comes at significant cost4 ,over the next #aj years1 the ,united ,states will spend hundreds of billions of dollars maintaining its nuclear force4 ,a substantial decrease in the nuclear arsenal of the ,united ,states is prudent for both the budget and national security4 7#d7 ,the national security interests of the ,united ,states can be well served by reducing the total number of deployed nuclear warheads and their delivery systems1 as suggested by the ,department of ,defense's ,january #bjab strategic guidance titled ,sustaining ,u4,s4 ,global ,leadership3 ,priorities for #bast ,century ,defense4 ,furthermore1 a number of arms control1 nuclear1 and national security experts have urged the ,united ,states to reduce the number of deployed nuclear warheads to no more than #a1jjj4 7#e7 ,economic security and national security are linked and both will be well served by smart defense spending4 ,admiral ,mike ,mullen1 ,chairman of the ,joint ,chiefs of ,staff1 stated on ,june #bd1 #bjaj1 that ,our national debt is our biggest national security threat and on ,august #b1 #bjaa1 stated that ,i haven't changed my view that the continually increasing debt is the biggest threat we have to our national security44 7#f7 ,the ,government ,accountability ,office has found that there is significant waste in the construction of the nuclear facilities of the ,national ,nuclear ,security ,administration of the ,department of ,energy4 #fjc4 ,reduction in nuclear forces 7a7 ,prohibition on use of ,b-#b and ,b-#eb aircraft for nuclear missions ,notwithstanding any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense may be obligated or expended to arm a ,b-#b or ,b-#eb aircraft with a nuclear weapon4 7b7 ,prohibition on new long-,range penetrating bomber aircraft ,notwithstanding any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for any of fiscal years #bjad through #bjbd for the ,department of ,defense may be obligated or expended for the research1 development1 test1 and evaluation or procurement of a long-range penetrating bomber aircraft4 7c7 ,prohibition on ,f-#ce nuclear mission ,notwithstanding any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense or the ,department of ,energy may be used to make the ,f-#ce ,joint ,strike ,fighter aircraft capable of carrying nuclear weapons4 7d7 ,termination of ,b#fa ,,lep ,notwithstanding any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense or the ,department of ,energy may be obligated or expended for the ,b#fa life extension program4 7e7 ,termination of ,w#gh ,,lep ,notwithstanding any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense or the ,department of ,energy may be obligated or expended for the ,w#gh life extension program4 7f7 ,reduction of nuclear-,armed submarines ,notwithstanding any other provision of law1 beginning in fiscal year #bjad1 the forces of the ,navy shall include not more than eight operational ballistic-missile submarines available for deployment4 7g7 ,limitation on ,,ssbn-,x submarines ,notwithstanding any other provision of law-- 7#a7 none of the funds authorized to be appropriated or otherwise made available for any of fiscal years #bjad through #bjbd for the ,department of ,defense may be obligated or expended for the procurement of an ,,ssbn-,x submarine2 and 7#b7 none of the funds authorized to be appropriated or otherwise made available for fiscal year #bjbe or any fiscal year thereafter for the ,department of ,defense may be obligated or expended for the procurement of more than eight such submarines4 7h7 ,reduction of ,i,c,b,ms ,notwithstanding any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense may be obligated or expended to maintain more than #bjj intercontinental ballistic missiles4 7i7 ,reduction of ,s,l,b,ms ,notwithstanding any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense may be obligated or expended to maintain more than #bej submarine-launched ballistic missiles4 7j7 ,prohibition on new ,,icbm ,notwithstanding any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense may be obligated or expended for the research1 development1 test1 and evaluation or procurement of a new intercontinental ballistic missile4 7k7 ,termination of ,,mox fuel plant project ,notwithstanding any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense or the ,department of ,energy may be obligated or expended for the ,mixed ,oxide 7,,mox7 ,fuel ,fabrication ,facility project4 7l7 ,termination of ,,cmrr project ,notwithstanding section #dbae of the ,atomic ,energy ,defense ,act or any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense or the ,department of ,energy may be obligated or expended for the ,chemistry and ,metallurgy ,research ,replacement nuclear facility4 7m7 ,termination of ,,upf ,notwithstanding any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense or the ,department of ,energy may be obligated or expended for the ,uranium ,processing ,facility located at the ,y-#ab ,national ,security ,complex4 7n7 ,termination of ,,meads ,notwithstanding any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense may be obligated or expended for the medium extended air defense system4 #fjd4 ,reports required 7a7 ,initial report ,not later than #ahj days after the date of the enactment of this ,act1 the ,secretary of ,defense and the ,secretary of ,energy shall jointly submit to the appropriate committees of ,congress a report outlining the plan of each ,secretary to carry out section #fjc4 7b7 ,annual report ,not later than ,march #a1 #bjad1 and each year thereafter1 the ,secretary of ,defense and the ,secretary of ,energy shall jointly submit to the appropriate committees of ,congress a report outlining the plan of each ,secretary to carry out section #fjc1 including any updates to previously submitted reports4 7c7 ,annual nuclear weapons accounting ,not later than ,september #cj1 #bjad1 and each year thereafter1 the ,president shall transmit to the appropriate committees of ,congress a report containing a comprehensive accounting by the ,director of the ,office of ,management and ,budget of the amounts obligated and expended by the ,federal ,government for each nuclear weapon and related nuclear program during-- 7#a7 the fiscal year covered by the report2 and 7#b7 the life cycle of such weapon or program4 7d7 ,appropriate committees of ,congress defined ,in this section1 the term appropriate committees of ,congress means-- 7#a7 the ,committee on ,armed ,services1 the ,committee on ,foreign ,relations1 the ,committee on ,appropriations1 and the ,committee on ,energy and ,natural ,resources of the ,senate2 and 7#b7 the ,committee on ,armed ,services1 the ,committee on ,foreign ,affairs1 the ,committee on ,appropriations1 the ,committee on ,energy and ,commerce1 and the ,committee on ,natural ,resources of the ,house of ,representatives4 ,b ,limiting ,excessive ,contractor ,compensation #faa4 ,limitation on allowable compensation costs 7a7 ,limitation 7#a7 ,civilian contracts ,section #dcjd7;a77#af7 of title #da1 ,united ,states ,code1 is amended to read as follows3 7#af7 ,costs of compensation of contractor and subcontractor employees for a fiscal year1 regardless of the contract funding source1 to the extent that such compensation exceeds the rate payable for level ,i of the ,executive ,schedule under section #ecab of title #e4 4 7#b7 ,defense contracts ,section #bcbd7;e77#a77,p7 of title #aj1 ,united ,states ,code1 is amended to read as follows3 7,p7 ,costs of compensation of contractor and subcontractor employees for a fiscal year1 regardless of the contract funding source1 to the extent that such compensation exceeds the rate payable for level ,i of the ,executive ,schedule under section #ecab of title #e4 4 7b7 ,conforming amendments 7#a7 ,in general ,section #aabg of title #da1 ,united ,states ,code1 is hereby repealed4 7#b7 ,clerical amendment ,the table of sections at the beginning of chapter #aa of title #da1 ,united ,states ,code1 is amended by striking the item relating to section #aabg4 ,c ,relocate ,troops ,from ,europe to the ,united ,states #fae4 ,relocation to ,united ,states military installations of members of the ,united ,states ,armed ,forces assigned to permanent duty in ,europe 7a7 ,relocation required ,not later than one year after the date of the enactment of this ,act1 the ,secretary of ,defense shall complete the relocation to military installations in the ,united ,states of at least #aj1jjj members of the ,armed ,forces of the ,united ,states who1 as of the date of the enactment of this ,act1 are assigned to permanent duty ashore in ,europe4 ,the members relocated shall not be replaced by the assignment of other members of the ,armed ,forces of the ,united ,states to permanent duty ashore in ,europe4 7b7 ,exclusion of certain members ,for purposes of complying with this section1 the ,secretary of ,defense shall not select members of the ,armed ,forces performing the following assignments for relocation to the ,united ,states3 7#a7 ,members assigned to permanent duty ashore in ,iceland1 ,greenland1 and the ,azores4 7#b7 ,members performing duties in ,europe for more than #agi days under a military-to-military contact program under section #afh of title #aj1 ,united ,states ,code4 7c7 ,exceptions2 waiver ,this section shall not apply in the event of a declaration of war or an armed attack on any ,european member nation of the ,north ,atlantic ,treaty ,organization4 ,the ,president may waive operation of this section if the ,president declares an emergency and immediately informs the ,congress of the waiver and the reasons therefor4 7d7 ,conforming amendment to permanent ceiling on ,united ,states military presence in ,europe ,section #ajjb7;c77#a7 of the ,department of ,defense ,authorization ,act1 #aihe 7#bb ,u4,s4,c4 #aibh note7 is amended by striking #ajj1jjj and inserting #fj1jjj4 ,d ,additional reduction in armed forces end strength levels #fba4 ,additional ,army and ,marine ,corps end strength reductions through retirement and separation 7a7 ,army ,in addition to the reductions in end strength levels of active duty members of the ,army otherwise required to be achieved during fiscal years #bjac through #bjag1 the ,secretary of the ,army shall reduce the end strength numbers for active duty personnel as of the end of fiscal year #bjag by an additional #bj1jjj4 7b7 ,marine ,corps ,in addition to the reductions in end strength levels of active duty members of the ,marine ,corps otherwise required to be achieved during fiscal years #bjac through #bjag1 the ,secretary of the ,navy shall reduce the end strength numbers for active duty personnel as of the end of fiscal year #bjag by an additional #g1jjj4 7c7 ,methods of achieving reductions ,to achieve the personnel reductions required by subsections 7a7 and 7b71 the ,secretary of the ,army and the ,secretary of the ,navy shall rely on the retirement and separation of members of the ,army and ,marine ,corps1 including as a result of the use of enhanced selective early retirement boards and early discharges under section #fch;a of title #aj1 ,united ,states ,code1 as reinstated by section #ejb of the ,national ,defense ,authorization ,act for ,fiscal ,year #bjac 7,public ,law #aab-bci74 ,e ,procurement of certain submarines1 carriers1 and aircraft #fca4 ,limitation on procurement of ,virginia class submarines ,notwithstanding any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for fiscal years #bjad through #bjbd for the ,department of ,defense may be obligated or expended to procure more than one ,virginia class submarine per fiscal year4 #fcb4 ,limitation on procurement of one ,ford class aircraft carrier 7a7 ,limitation ,notwithstanding any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense may be obligated or expended to procure the ,ford class aircraft carrier designated ,,cvn-#hj4 7b7 ,effect on requirement for #aa operational aircraft carriers ,subsection 7a7 applies even in the event that the number of operational aircraft carriers for the naval combat forces of the ,navy becomes less than #aa1 notwithstanding section #ejfe7;b7 of title #aj1 ,united ,states ,code4 #fcc4 ,authority for procurement of ,f_/,a-#ah;,e and ,f_/,a-#ah;,f aircraft 7a7 ,replacement of planned procurement of ,f-#ce;,c aircraft 7#a7 ,limitation on procurement ,notwithstanding any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense may be obligated or expended to procure the #bcg ,f-#ce;,c aircraft that the ,secretary of the ,navy planned to procure as of the date on which the budget of the ,president was submitted to ,congress under section #aaje7;a7 of title #ca1 ,united ,states ,code1 for fiscal year #bjac4 7#b7 ,authority for procurement ,of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense1 the ,secretary of the ,navy may procure not more than a total of #bdj ,f_/,a-#ah;,e and ,f_/,a-#ah;,f aircraft4 7b7 ,replacement of procurement of ,f-#ce;,b aircraft 7#a7 ,limitation on procurement ,notwithstanding any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense may be obligated or expended to procure more than #bjj ,f-#ce;,b aircraft4 7#b7 ,authority for procurement ,of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense1 the ,secretary of the ,navy may procure not more than a total of #bbj ,f_/,a-#ah;,e and ,f_/,a-#ah;,f aircraft4 #fcd4 ,prohibition on procurement of ,v-#bb ,osprey aircraft ,notwithstanding any other provision of law1 none of the funds authorized to be appropriated or otherwise made available for fiscal year #bjad or any fiscal year thereafter for the ,department of ,defense may be obligated or expended for the procurement of ,v-#bb ,osprey aircraft4 ,f ,limit ,military ,bands #fda4 ,limitation on expenditures for military musical units ,amounts expended for any fiscal year for military musical units 7as defined in section #igd of title #aj1 ,united ,states ,code7 may not exceed #bjj1jjj1jjj4 ,g ,reduction in ,number of ,general and ,flag ,officers #fea4 ,return of maximum number of general and flag officers to ,cold ,war levels ,section #ebf of title #aj1 ,united ,states ,code1 is amended by adding at the end the following new subsection3 7i7 ,additional limitation stated as ratio of members on active duty ,notwithstanding any other provision of this section1 the number of general officers on active duty in the ,army1 ,air ,force1 or ,marine ,corps1 and the number of flag officers on active duty in the ,navy1 may not exceed six general officers or flag officers for each #aj1jjj members of that armed force on active duty4 4 ,h ,audit the ,pentagon #ffa4 ,purposes ,the purposes of this subtitle are as follows3 7#a7 ,to strengthen ,american national security by ensuring that-- 7,a7 military planning1 operations1 weapons development1 and a long-term national security strategy are connected to sound financial controls2 and 7,b7 defense dollars are spent efficiently4 7#b7 ,to instill a culture of accountability at the ,department of ,defense that supports the vast majority of dedicated members of the ,armed ,forces and civilians who want to ensure proper accounting and prevent waste1 fraud1 and abuse4 #ffb4 ,findings ,congress finds the following3 7#a7 ,the #bjaa ,financial ,report of the ,united ,states ,government found that #cb of #ce major ,federal agencies received clean audit opinions4 ,two more1 the ,department of ,homeland ,security and the ,department of ,state1 received qualified audit opinions but are making progress4 ,only the ,department of ,defense had a disclaimer because it lacked any auditable reporting or accounting available for independent review4 7#b7 ,the financial management of the ,department of ,defense has been on the ,high-,risk list of the ,government ,accountability ,office 7,,gao74 ,the ,,gao found that the ,department is not consistently able to control costs2 ensure basic accountability2 anticipate future costs and claims on the budget2 measure performance2 maintain funds control2 and prevent and detect fraud1 waste1 and abuse4 7#c7 ,at a ,september #bjaj hearing of the ,senate1 the ,government ,accountability ,office stated that past expenditures by the ,department of ,defense of #e1hjj1jjj1jjj to improve financial information1 and billions of dollars more of anticipated expenditures on new information technology systems for that purpose1 may not suffice to achieve full audit readiness of the financial statement of the ,department4 ,at that hearing1 the ,government ,accountability ,office could not predict when the ,department would achieve full audit readiness of such statements4 7#d7 ,section #i of article ,i of the ,constitution of the ,united ,states requires all agencies of the ,federal ,government1 including the ,department of ,defense1 to publish a regular statement and account of the receipts and expenditures of all public money4 7#e7 ,section #cjc7;d7 of the ,chief ,financial ,officers ,act of #aiij 7,public ,law #aja-egf7 required that financial statements be prepared and independently audited for the ,department of the ,army by ,march #ca1 #aiib1 and for the ,department of the ,air ,force by ,march #ca1 #aiic4 ,neither the ,department of the ,army nor the ,department of the ,air ,force has complied4 7#f7 ,section #ceae of title #ca1 ,united ,states ,code1 requires the agencies of the ,federal ,government1 including the ,department of ,defense1 to present auditable financial statements beginning not later than ,march #a1 #aiig4 ,the ,department has not complied with this law4 7#g7 ,the ,federal ,financial ,management ,improvement ,act of #aiif 7#ca ,u4,s4,c4 #ceab note7 requires financial systems acquired by the ,federal ,government1 including the ,department of ,defense1 to be able to provide information to leaders to manage and control the cost of government4 ,the ,department has not complied with this law4 7#h7 ,the ,national ,defense ,authorization ,act for ,fiscal ,year #bjjb 7,public ,law #ajg-ajg7 requires the ,secretary of ,defense to report to ,congress annually on the reliability of the financial statements of the ,department of ,defense1 to minimize resources spent on producing unreliable financial statements1 and to use resources saved to improve financial management policies1 procedures1 and internal controls4 7#i7 ,in #bjje1 the ,department of ,defense created a ,financial ,improvement and ,audit ,readiness 7,,fiar7 ,plan1 overseen by a directorate within the office of the ,under ,secretary of ,defense 7,comptroller71 to improve ,department business processes with the goal of producing timely1 reliable1 and accurate financial information that could generate an audit-ready annual financial statement4 ,in ,december #bjje1 that directorate1 known as the ,,fiar ,directorate1 issued the first of a series of semiannual reports on the status of the ,financial ,improvement and ,audit ,readiness ,plan4 7#aj7 ,the ,national ,defense ,authorization ,act for ,fiscal ,year #bjaj 7,public ,law #aaa-hd7 requires regular status reports on the ,financial ,improvement and ,audit ,readiness ,plan described in paragraph 7#i71 and codified as a statutory requirement the goal of the ,plan in ensuring that ,department of ,defense financial statements are validated as ready for audit not later than ,september #cj1 #bjag4 #ffc4 ,spending reductions for agencies without clean audits 7a7 ,applicability 7#a7 ,in general ,subject to paragraph 7#b71 this section applies to each ,federal agency identified by the ,director of the ,office of ,management and ,budget as required to have an audited financial statement under section #ceae of title #ca1 ,united ,states ,code4 7#b7 ,applicability to military departments and defense agencies ,for purposes of paragraph 7#a71 in the case of the ,department of ,defense1 each military department and each ,defense ,agency shall be treated as a separate ,federal agency4 7b7 ,definitions ,in this section1 the terms financial statement and external independent auditor have the meanings given those terms in section #ceba7;e7 of title #ca1 ,united ,states ,code4 7c7 ,adjustments for financial accountability 7#a7 ,reduction required ,if a ,federal agency has not submitted a financial statement for a fiscal year by ,march #a of the next fiscal year1 or if such financial statement has not received either an unqualified or a qualified audit opinion by an independent external auditor by such date1 the discretionary budget authority available for the ,federal agency for the then current fiscal year is reduced by #e percent1 with the reduction applied proportionately to each account 7other than an account listed in subsection 7d7 or an account for which a waiver is made under subsection 7e774 7#b7 ,treatment of reduction ,an amount equal to the total amount of any reduction made under paragraph 7#b7 shall be retained in the general fund of the ,treasury for the purposes of deficit reduction4 7d7 ,accounts excluded ,the following accounts are excluded from any reductions referred to in subsection 7c77#a73 7#a7 ,military personnel1 reserve personnel1 and ,national ,guard personnel accounts of the ,department of ,defense4 7#b7 ,the ,defense ,health ,program account of the ,department of ,defense4 7e7 ,waiver ,the ,president may waive subsection 7c77#a7 with respect to an account if the ,president certifies that applying the subsection to that account would harm national security or members of the ,armed ,forces who are serving in a combat zone4 7f7 ,report ,not later than #fj days after an adjustment is made under subsection 7c71 the ,director of the ,office of ,management and ,budget shall submit to ,congress a report describing the amount of the adjustment and the affected accounts4 #ffd4 ,report on ,department of ,defense reporting requirements ,not later than #ahj days after the date of the enactment of this ,act1 the ,under ,secretary of ,defense 7,comptroller7 shall submit to ,congress a report setting forth the following3 7#a7 ,a list of each report of the ,department of ,defense required by law to be submitted to ,congress which1 in the opinion of the ,under ,secretary1 would no longer be necessary if the financial statements of the ,department of ,defense were audited with an unqualified opinion4 7#b7 ,a list of each report of the ,department required by law to be submitted to ,congress which1 in the opinion of the ,under ,secretary1 interferes with the capacity of the ,department to achieve an audit of the financial statements of the ,department with an unqualified opinion4 #ffe4 ,sense of ,congress in implementation of defense budget reductions ,it is the sense of ,congress that-- 7#a7 as the overall defense budget is cut1 congressional defense committees and the ,department of ,defense should not endanger members of the ,armed ,forces by reducing wounded warrior accounts or vital protection 7such as body armor7 for members of the ,armed ,forces in harm's way2 7#b7 the valuation of legacy assets by the ,department of ,defense should be simplified without compromising essential controls or generally accepted government auditing standards2 and 7#c7 nothing in this subtitle should be construed to require or permit the declassification of accounting details about classified defense programs1 and1 as required by law1 the ,department of ,defense should ensure financial accountability in such programs using proven practices1 including using auditors with security clearances4 ,,vii ,invest in ,job ,creation ,a ,making ,work ,pay ,extension #gja4 ,one-year extension of making work pay credit 7a7 ,in general ,subsection 7e7 of section #cf;,a of the ,internal ,revenue ,code of #aihf is amended to read as follows3 7e7 ,termination ,this section shall not apply to taxable years-- 7#a7 beginning after ,december #ca1 #bjaj1 and before ,january #a1 #bjac1 or 7#b7 beginning after ,december #ca1 #bjac4 4 7b7 ,treatment of possessions ,paragraph 7#a7 of section #ajja7;b7 of the ,american ,recovery and ,reinvestment ,tax ,act of #bjji is amended by striking #bjji and #bjaj both places it appears and inserting #bjji1 #bjaj1 and #bjac4 7c7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after ,december #ca1 #bjab4 ,b ,support for ,teachers and ,school ,modernization ,i ,preventing teacher layoffs and supporting the creation of additional jobs in public early childhood1 elementary1 and secondary education #gaa4 ,purpose ,the purpose of this part is to provide funds to ,states to prevent teacher layoffs and support the creation of additional jobs in public early childhood1 elementary1 and secondary education in the #bjab-bjac and #bjac-bjad school years4 #gab4 ,grants for the outlying areas and the ,secretary of the ,interior2 availability of funds 7a7 ,reservation of funds ,from the amount appropriated to carry out this subtitle under section #gba1 the ,secretary-- 7#a7 shall reserve up to one-half of one percent to provide assistance to the outlying areas on the basis of their respective needs1 as determined by the ,secretary1 for activities consistent with this part under such terms and conditions as the ,secretary may determine2 7#b7 shall reserve up to one-half of one percent to provide assistance to the ,secretary of the ,interior to carry out activities consistent with this part1 in schools operated or funded by the ,bureau of ,indian ,education2 and 7#c7 may reserve up to #b1jjj1jjj for administration and oversight of this subtitle1 including program evaluation4 7b7 ,availability of funds ,funds made available under section #gba shall remain available to the ,secretary until ,september #cj1 #bjad4 #gac4 ,state allocation 7a7 ,allocation ,after reserving funds under section section #gab7;a71 the ,secretary shall allocate the remaining funds appropriated under section #gba to ,states1 of which-- 7#a7 #fj percent shall be allocated to ,states on the basis of their relative population of individuals aged #e through #ag2 and 7#b7 #dj percent shall be allocated to ,states on the basis of their relative total population4 7b7 ,awards ,the ,secretary shall award a ,state's allocation under subsection 7a7 to the ,governor of the ,state only if the ,secretary has approved the ,state's application under section #gad4 7c7 ,alternate distribution of funds 7#a7 ,in general ,if1 within #cj days after the date of enactment of this ,act1 a ,governor has not submitted an approvable application to the ,secretary1 the ,secretary shall1 consistent with paragraph 7#b71 provide for funds allocated to that ,state to be distributed to another entity or other entities in the ,state for the support of early childhood1 elementary1 and secondary education1 under such terms and conditions as the ,secretary may establish4 7#b7 ,maintenance of effort 7,a7 ,governor assurance ,the ,secretary shall not allocate funds under paragraph 7#a7 unless the ,governor of the ,state provides an assurance to the ,secretary that the ,state will for fiscal years #bjac and #bjad meet the requirements of section #gah4 7,b7 ,allocations to other entities ,notwithstanding subparagraph 7,a71 the ,secretary may allocate up to #ej percent of the funds that are available to the ,state under paragraph 7#a7 to another entity or entities in the ,state1 provided that the ,state educational agency submits data to the ,secretary demonstrating that the ,state will for fiscal year #bjac meet the requirements of section #gah7;a7 or the ,secretary otherwise determines that the ,state will meet those requirements1 or such comparable requirements as the ,secretary may establish1 for that year4 7#c7 ,requirements ,an entity that receives funds under paragraph 7#a7 shall use those funds in accordance with the requirements of this subtitle4 7d7 ,reallocation ,if a ,state does not receive funding under this part or only receives a portion of its allocation under subsection 7c71 the ,secretary shall reallocate the ,state's entire allocation or the remaining portion of its allocation1 as the case may be1 to the remaining ,states in accordance with subsection 7a74 #gad4 ,state application ,the ,governor of a ,state desiring to receive a grant under this subtitle shall submit an application to the ,secretary within #cj days of the date of enactment of this ,act1 in such manner1 and containing such information as the ,secretary may reasonably require to determine the ,state's compliance with applicable provisions of law4 #gae4 ,state reservation and responsibilities 7a7 ,reservation ,each ,state receiving a grant under section #gac7;b7 may reserve-- 7#a7 not more than #aj percent of the grant funds for awards to ,state-funded early learning programs2 and 7#b7 not more than #b percent of the grant funds for the administrative costs of carrying out its responsibilities under this subtitle4 7b7 ,state responsibilities ,each ,state receiving a grant under this part shall1 after reserving any funds under subsection 7a7-- 7#a7 use the remaining grant funds only for awards to local educational agencies for the support of early childhood1 elementary1 and secondary education2 and 7#b7 distribute those funds1 through subgrants1 to its local educational agencies by distributing-- 7,a7 #fj percent on the basis of the local educational agencies' relative shares of enrollment2 and 7,b7 #dj percent on the basis of the local educational agencies' relative shares of funds received under part ,a of title ,i of the ,elementary and ,secondary ,education ,act of #aife for fiscal year #bjab2 and 7#c7 make those funds available to local educational agencies no later than #ajj days after receiving a grant from the ,secretary4 7c7 ,prohibitions ,a ,state shall not use funds received under this subtitle to directly or indirectly-- 7#a7 establish1 restore1 or supplement a rainy-day fund2 7#b7 supplant ,state funds in a manner that has the effect of establishing1 restoring1 or supplementing a rainy-day fund2 7#c7 reduce or retire debt obligations incurred by the ,state2 or 7#d7 supplant ,state funds in a manner that has the effect of reducing or retiring debt obligations incurred by the ,state4 #gaf4 ,local educational agencies ,each local educational agency that receives a subgrant under this part-- 7#a7 shall use the subgrant funds only for compensation and benefits and other expenses1 such as support services1 necessary to retain existing employees1 recall or rehire former employees1 or hire new employees to provide early childhood1 elementary1 or secondary educational and related services2 7#b7 shall obligate those funds not later than ,september #cj1 #bjad2 and 7#c7 may not use those funds for general administrative expenses or for other support services or expenditures1 as those terms are defined by the ,national ,center for ,education ,statistics in the ,common ,core of ,data1 as of the date of enactment of this ,act4 #gag4 ,early learning ,each ,state-funded early learning program that receives funds under this subtitle shall-- 7#a7 use those funds only for compensation1 benefits1 and other expenses1 such as support services1 necessary to retain early childhood educators1 recall or rehire former early childhood educators1 or hire new early childhood educators to provide early learning services2 and 7#b7 obligate those funds not later than ,september #cj1 #bjad4 #gah4 ,maintenance of effort 7a7 ,requirement ,the ,secretary shall not allocate funds to a ,state under this subtitle unless the ,state provides an assurance to the ,secretary that-- 7#a7 for ,state fiscal year #bjac-- 7,a7 the ,state will maintain ,state support for early childhood1 elementary1 and secondary education 7in the aggregate or on the basis of expenditure per pupil7 and for public institutions of higher education 7not including support for capital projects or for research and development or tuition and fees paid by students7 at not less than the level of such support for each of the two categories for ,state fiscal year #bjab2 or 7,b7 the ,state will maintain ,state support for early childhood1 elementary1 and secondary education and for public institutions of higher education 7not including support for capital projects or for research and development or tuition and fees paid by students7 at a percentage of the total revenues available to the ,state that is equal to or greater than the percentage provided for ,state fiscal year #bjab2 and 7#b7 for ,state fiscal year #bjad-- 7,a7 the ,state will maintain ,state support for early childhood1 elementary1 and secondary education 7in the aggregate or on the basis of expenditure per pupil7 and for public institutions of higher education 7not including support for capital projects or for research and development or tuition and fees paid by students7 at not less than the level of such support for each of the two categories for ,state fiscal year #bjac2 or 7,b7 the ,state will maintain ,state support for early childhood1 elementary1 and secondary education and for public institutions of higher education 7not including support for capital projects or for research and development or tuition and fees paid by students7 at a percentage of the total revenues available to the ,state that is equal to or greater than the percentage provided for ,state fiscal year #bjac4 7b7 ,waiver ,the ,secretary may waive the requirements of this section if the ,secretary determines that a waiver would be equitable due to-- 7#a7 exceptional or uncontrollable circumstances1 such as a natural disaster2 or 7#b7 a precipitous decline in the financial resources of the ,state4 #gai4 ,reporting ,each ,state that receives a grant under this part shall submit1 on an annual basis1 a report to the ,secretary that contains-- 7#a7 a description of how funds received under this part were expended or obligated2 and 7#b7 an estimate of the number of jobs supported by the ,state using funds received under this subtitle4 #gbj4 ,definitions ,in this part3 7#a7 ,,esea definitions ,except as otherwise provided1 the terms local educational agency1 outlying area1 ,secretary1 ,state1 and ,state educational agency have the meanings given those terms in section #iaja of the ,elementary and ,secondary ,education ,act of #aife 7#bj ,u4,s4,c4 #ghja74 7#b7 ,state ,the term ,state does not include an outlying area4 7#c7 ,early child educator ,the term early childhood educator means an individual who-- 7,a7 works directly with children in a ,state-funded early learning program in a low-income community2 7,b7 is involved directly in the care1 development1 and education of infants1 toddlers1 or young children age five and under2 and 7,c7 has completed a baccalaureate or advanced degree in early childhood development or early childhood education1 or in a field related to early childhood education4 7#d7 ,state-funded early learning program ,the term ,state-funded early learning program means a program that provides educational services to children from birth to kindergarten entry and receives funding from a ,state4 #gba4 ,authorization of appropriations ,there are authorized to be appropriated1 and there are appropriated1 #cj1jjj1jjj1jjj to carry out this part for fiscal year #bjac4 ,,ii ,elementary and secondary schools #gca4 ,purpose ,the purpose of this part is to provide assistance for the modernization1 renovation1 and repair of elementary and secondary school buildings in public school districts across ,america in order to support the achievement of improved educational outcomes in those schools4 #gcb4 ,authorization of appropriations ,there are authorized to be appropriated1 and there are appropriated1 #be1jjj1jjj1jjj to carry out this part1 which shall be available for obligation by the ,secretary until ,september #cj1 #bjad4 #gcc4 ,allocation of funds 7a7 ,reservations ,of the amount made available to carry out this part1 the ,secretary shall reserve-- 7#a7 one-half of one percent for the ,secretary of the ,interior to carry out modernization1 renovation1 and repair activities described in section #gcf in schools operated or funded by the ,bureau of ,indian ,education2 7#b7 one-half of one percent to make grants to the outlying areas for modernization1 renovation1 and repair activities described in section #gcf2 and 7#c7 such funds as the ,secretary determines are needed to conduct a survey1 by the ,national ,center for ,education ,statistics1 of the school construction1 modernization1 renovation1 and repair needs of the public schools of the ,united ,states4 7b7 ,state allocation ,after reserving funds under subsection 7a71 the ,secretary shall allocate the remaining amount among the ,states in proportion to their respective allocations under part ,a of title ,i of the ,elementary and ,secondary ,education ,act of #aife 7in this part referred to as the ,,esea7 7#bj ,u4,s4,c4 #fcaa et seq47 for fiscal year #bjac1 except that-- 7#a7 the ,secretary shall allocate #dj percent of such remaining amount to the #ajj local educational agencies with the largest numbers of children aged #e-ag living in poverty1 as determined using the most recent data available from the ,department of ,commerce that are satisfactory to the ,secretary1 in proportion to those agencies' respective allocations under part ,a of title ,i of the ,,esea for fiscal year #bjac2 and 7#b7 the allocation to any ,state shall be reduced by the aggregate amount of the allocations under paragraph 7#a7 to local educational agencies in that ,state4 7c7 ,remaining allocation 7#a7 ,states ,if a ,state does not apply for its allocation under subsection 7b7 7or applies for less than the full allocation for which it is eligible7 or does not use that allocation in a timely manner1 the ,secretary may-- 7,a7 reallocate all or a portion of that allocation to the other ,states in accordance with subsection 7b72 or 7,b7 use all or a portion of that allocation to make direct allocations to local educational agencies within the ,state based on their respective allocations under part ,a of title ,i of the ,,esea for fiscal year #bjac or such other method as the ,secretary may determine4 7#b7 ,local educational agencies ,if a local educational agency does not apply for its allocation under subsection 7b77#a71 applies for less than the full allocation for which it is eligible1 or does not use that allocation in a timely manner1 the ,secretary may reallocate all or a portion of its allocation to the ,state in which that agency is located4 #gcd4 ,state use of funds 7a7 ,reservation ,each ,state that receives a grant under this part may reserve not more than one percent of the ,state's allocation under section #gcc7;b7 for the purpose of administering the grant1 except that no ,state may reserve more than #gej1jjj for this purpose4 7b7 ,funds to local educational agencies 7#a7 ,formula subgrants ,from the grant funds that are not reserved under subsection 7a71 a ,state shall allocate at least #ej percent to local educational agencies1 including charter schools that are local educational agencies1 that did not receive funds under section #gcc7;b77#a7 from the ,secretary1 in accordance with their respective allocations under part ,a of title ,i of the ,,esea for fiscal year #bjac1 except that no such local educational agency shall receive less than #aj1jjj4 7#b7 ,additional subgrants ,the ,state shall use any funds remaining1 after reserving funds under subsection 7a7 and allocating funds under paragraph 7#a71 for subgrants to local educational agencies that did not receive funds under section #gcc7;b77#a71 including charter schools that are local educational agencies1 to support modernization1 renovation1 and repair projects that the ,state determines1 using objective criteria1 are most needed in the ,state1 with priority given to projects in rural local educational agencies4 7c7 ,remaining funds ,if a local educational agency does not apply for an allocation under subsection 7b77#a71 applies for less than its full allocation1 or fails to use that allocation in a timely manner1 the ,state may reallocate any unused portion to other local educational agencies in accordance with subsection 7b74 #gce4 ,state and local applications 7a7 ,state application ,a ,state that desires to receive a grant under this part shall submit an application to the ,secretary at such time1 in such manner1 and containing such information and assurances as the ,secretary may require1 which shall include-- 7#a7 an identification of the ,state agency or entity that will administer the program under this part2 and 7#b7 the ,state's process for determining how the grant funds will be distributed and administered1 including-- 7,a7 how the ,state will determine the criteria and priorities in making subgrants under section #gcd7;b77#b72 7,b7 any additional criteria the ,state will use in determining which projects it will fund under that section2 7,c7 a description of how the ,state will consider-- 7i7 the needs of local educational agencies for assistance under this part2 7ii7 the impact of potential projects on job creation in the ,state2 7iii7 the fiscal capacity of local educational agencies applying for assistance2 7iv7 the percentage of children in those local educational agencies who are from low-income families2 and 7v7 the potential for leveraging assistance provided by the program under this part through matching or other financing mechanisms2 7,d7 a description of how the ,state will ensure that the local educational agencies receiving subgrants meet the requirements of this part2 7,e7 a description of how the ,state will ensure that the ,state and its local educational agencies meet the deadlines established in section #gch2 7,f7 a description of how the ,state will give priority to the use of green practices that are certified1 verified1 or consistent with any applicable provisions of-- 7i7 the ,,leed ,green ,building ,rating ,system2 7ii7 ,energy ,star2 7iii7 the ,,chps ,criteria2 7iv7 ,green ,globes2 or 7v7 an equivalent program adopted by the ,state or another jurisdiction with authority over the local educational agency2 7,g7 a description of the steps that the ,state will take to ensure that local educational agencies receiving subgrants under this part will adequately maintain any facilities that are modernized1 renovated1 or repaired with such subgrant funds2 and 7,h7 such additional information and assurances as the ,secretary may require4 7b7 ,local application ,a local educational agency that is eligible under section #gcc7;b77#a7 that desires to receive a grant under this part shall submit an application to the ,secretary at such time1 in such manner1 and containing such information and assurances as the ,secretary may require1 which shall include-- 7#a7 a description of how the local educational agency will meet the deadlines and requirements of this part2 7#b7 a description of the steps that the local educational agency will take to adequately maintain any facilities that are modernized1 renovated1 or repaired with funds under this part2 and 7#c7 such additional information and assurances as the ,secretary may require4 #gcf4 ,use of funds 7a7 ,in general ,funds awarded to local educational agencies under this part shall be used only for either or both of the following modernization1 renovation1 or repair activities in facilities that are used for elementary or secondary education or for early learning programs3 7#a7 ,direct payments for school modernization1 renovation1 or repair4 7#b7 ,to pay interest on bonds or payments for other financing instruments that are newly issued for the purpose of financing school modernization1 renovation1 or repair4 7b7 ,supplement1 not supplant ,funds made available under this part shall be used to supplement1 and not supplant1 other ,federal1 ,state1 and local funds that would otherwise be expended to modernize1 renovate1 or repair eligible school facilities4 7c7 ,prohibition ,funds awarded to local educational agencies under this part may not be used for-- 7#a7 new construction2 7#b7 payment of routine maintenance costs2 or 7#c7 modernization1 renovation1 or repair of stadiums or other facilities primarily used for athletic contests or exhibitions or other events for which admission is charged to the general public4 #gcg4 ,private schools 7a7 ,in general ,section #ieja of the ,,esea 7#bj ,u4,s4,c4 #ghha7 shall apply to this part in the same manner as it applies to activities under that ,act1 except that-- 7#a7 such section #ieja shall not apply with respect to the title to any real property modernized1 renovated1 or repaired with assistance provided under this part2 7#b7 educational services or other benefits funded under this part for private schools shall be provided only to private1 nonprofit elementary or secondary schools with a rate of child poverty of at least #dj percent and may include only-- 7,a7 modifications of school facilities necessary to meet the standards applicable to public schools under the ,americans with ,disabilities ,act of #aiij 7#db ,u4,s4,c4 #abaja et seq472 7,b7 modifications of school facilities necessary to meet the standards applicable to public schools under section #ejd of the ,rehabilitation ,act of #aigc 7#bi ,u4,s4,c4 #gid72 and 7,c7 asbestos or polychlorinated biphenyls abatement or removal from school facilities2 and 7#c7 expenditures for services provided using funds made available under section #gcf shall be considered equal for purposes of section #ieja7;a77#d7 of the ,,esea if the per-pupil expenditures for services described in paragraph 7#b7 for students enrolled in private1 nonprofit elementary and secondary schools that have child-poverty rates of at least #dj percent are consistent with the per-pupil expenditures under this part for children enrolled in the public schools of the local educational agency receiving funds under this part4 7b7 ,remaining funds ,if the expenditure for services described in subsection 7a77#b7 is less than the amount calculated under subsection 7a77#c7 because of insufficient need for those services1 the remainder shall be available to the local educational agency for modernization1 renovation1 or repair of its school facilities4 7c7 ,application ,if any provision of this section1 or the application thereof1 to any person or circumstance is judicially determined to be invalid1 the remainder of the section and the application to other persons or circumstances shall not be affected thereby4 #gch4 ,additional provisions 7a7 #bd-,month period of availability ,funds appropriated under section #gcb shall be available for obligation by local educational agencies receiving grants from the ,secretary under section #gcc7;b77#a71 by ,states reserving funds under section #gcd7;a71 and by local educational agencies receiving subgrants under section #gcd7;b77#a7 only during the period that ends #bd months after the date of enactment of this ,act4 7b7 #cf-,month period of availability ,funds appropriated under section #gcb shall be available for obligation by local educational agencies receiving subgrants under section #gcd7;b77#b7 only during the period that ends #cf months after the date of enactment of this ,act4 7c7 ,applicability of ,,gepa ,section #dci of the ,general ,education ,provisions ,act 7#bj ,u4,s4,c4 #abcb;b7 shall apply to funds available under this part4 7d7 ,limitation ,for purposes of section #gcc7;b77#a71 ,hawaii1 the ,district of ,columbia1 and the ,commonwealth of ,puerto ,rico are not local educational agencies4 ,,iii ,community ,college modernization #gci4 ,federal assistance for community college modernization 7a7 ,in general 7#a7 ,grant program ,from the amounts made available under subsection 7h71 the ,secretary shall award grants to ,states to modernize1 renovate1 or repair existing facilities at community colleges4 7#b7 ,allocation 7,a7 ,reservations ,of the amount made available to carry out this section1 the ,secretary shall reserve-- 7i7 up to #j4be percent for grants to institutions that are eligible under section #caf of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajei;c7 to provide for modernization1 renovation1 and repair activities described in this section2 and 7ii7 up to #j4be percent for grants to the outlying areas to provide for modernization1 renovation1 and repair activities described in this section4 7,b7 ,allocation ,after reserving funds under subparagraph 7,a71 the ,secretary shall allocate to each ,state that has an application approved by the ,secretary an amount that bears the same relation to any remaining funds as the total number of students in such ,state who are enrolled in institutions described in section #gdj7;b77#a77;,a7 plus the number of students who are estimated to be enrolled in and pursuing a degree or certificate that is not a bachelor's1 master's1 professional1 or other advanced degree in institutions described in section #gdj7;b77#a77;,b71 based on the proportion of degrees or certificates awarded by such institutions that are not bachelor's1 master's1 professional1 or other advanced degrees1 as reported to the ,integrated ,postsecondary ,data ,system bears to the estimated total number of such students in all ,states1 except that no ,state shall receive less than #b1ejj1jjj4 7,c7 ,reallocation ,amounts not allocated under this section to a ,state because the ,state either did not submit an application under subsection 7b71 the ,state submitted an application that the ,secretary determined did not meet the requirements of such subsection1 or the ,state cannot demonstrate to the ,secretary a sufficient demand for projects to warrant the full allocation of the funds1 shall be proportionately reallocated under this paragraph to the other ,states that have a demonstrated need for1 and are receiving1 allocations under this section4 7,d7 ,state administration ,a ,state that receives a grant under this section may use not more than one percent of that grant to administer it1 except that no ,state may use more than #gej1jjj of its grant for this purpose4 7#c7 ,supplement1 not supplant ,funds made available under this section shall be used to supplement1 and not supplant1 other ,federal1 ,state1 and local funds that would otherwise be expended to modernize1 renovate1 or repair existing community college facilities4 7b7 ,application ,a ,state that desires to receive a grant under this section shall submit an application to the ,secretary at such time1 in such manner1 and containing such information and assurances as the ,secretary may require4 ,such application shall include a description of-- 7#a7 how the funds provided under this section will improve instruction at community colleges in the ,state and will improve the ability of those colleges to educate and train students to meet the workforce needs of employers in the ,state2 7#b7 the projected start of each project and the estimated number of persons to be employed in the project2 and 7#c7 the cost of each project and the total amount of funds requested for each project and for all projects4 7c7 ,prohibited uses of funds 7#a7 ,in general ,no funds awarded under this section may be used for-- 7,a7 payment of routine maintenance costs2 7,b7 construction1 modernization1 renovation1 or repair of stadiums or other facilities primarily used for athletic contests or exhibitions or other events for which admission is charged to the general public2 or 7,c7 construction1 modernization1 renovation1 or repair of facilities-- 7i7 used for sectarian instruction1 religious worship1 or a school or department of divinity2 or 7ii7 in which a substantial portion of the functions of the facilities are subsumed in a religious mission4 7#b7 ,four-year institutions ,no funds awarded to a four-year public institution of higher education under this section may be used for any facility1 service1 or program of the institution that is not available to students who are pursuing a degree or certificate that is not a bachelor's1 master's1 professional1 or other advanced degree4 7d7 ,green projects ,in providing assistance to community college projects under this section1 the ,state shall consider the extent to which a community college's project involves activities that are certified1 verified1 or consistent with the applicable provisions of-- 7#a7 the ,,leed ,green ,building ,rating ,system2 7#b7 ,energy ,star2 7#c7 the ,,chps ,criteria1 as applicable2 7#d7 ,green ,globes2 or 7#e7 an equivalent program adopted by the ,state or the ,state higher education agency that includes a verifiable method to demonstrate compliance with such program4 7e7 ,application of ,,gepa ,section #dci of the ,general ,education ,provisions ,act 7#bj ,u4,s4,c4 #abcb;b7 shall apply to funds available under this section4 7f7 ,reports by the states ,each ,state that receives a grant under this section shall1 not later than ,september #cj1 #bjac1 and annually thereafter for each fiscal year in which the ,state expends funds received under this section1 submit to the ,secretary a report that includes-- 7#a7 a description of the projects for which the grant was1 or will be1 used2 7#b7 a description of the amount and nature of the assistance provided to each community college under this section2 and 7#c7 the number of jobs created by the projects funded under this section4 7g7 ,report by the secretary ,the ,secretary shall submit to the authorizing committees 7as defined in section #ajc of the ,higher ,education ,act of #aife2 #bj ,u4,s4,c4 #ajjc7 an annual report on the grants made under this section1 including the information described in subsection 7f74 7h7 ,availability of funds 7#a7 ,there are authorized to be appropriated1 and there are appropriated1 to carry out this section 7in addition to any other amounts appropriated to carry out this section and out of any money in the ,treasury not otherwise appropriated71 #e1jjj1jjj1jjj for fiscal year #bjac4 7#b7 ,funds appropriated under this subsection shall be available for obligation by community colleges only during the period that ends #cf months after the date of enactment of this ,act4 ,,iv ,general provisions #gdj4 ,definitions 7a7 ,,esea terms ,except as otherwise provided1 in this subtitle1 the terms local educational agency1 ,secretary1 and ,state educational agency have the meanings given those terms in section #iaja of the ,elementary and ,secondary ,education ,act of #aife 7#bj ,u4,s4,c4 #ghja74 7b7 ,additional definitions ,the following definitions apply to this title3 7#a7 ,community college ,the term community college means-- 7,a7 a junior or community college1 as that term is defined in section #cab7;f7 of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajeh7;f772 or 7,b7 an institution of higher education 7as defined in section #aja of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajja77 that awards a significant number of degrees and certificates1 as determined by the ,secretary1 that are not-- 7i7 bachelor's degrees 7or an equivalent72 or 7ii7 master's1 professional1 or other advanced degrees4 7#b7 ,,chps criteria ,the term ,,chps ,criteria means the green building rating program developed by the ,collaborative for ,high ,performance ,schools4 7#c7 ,energy star ,the term ,energy ,star means the ,energy ,star program of the ,united ,states ,department of ,energy and the ,united ,states ,environmental ,protection ,agency4 7#d7 ,green globes ,the term ,green ,globes means the ,green ,building ,initiative environmental design and rating system referred to as ,green ,globes4 7#e7 ,leed green building rating system ,the term ,,leed ,green ,building ,rating ,system means the ,united ,states ,green ,building ,council ,leadership in ,energy and ,environmental ,design green building rating standard referred to as the ,,leed ,green ,building ,rating ,system4 7#f7 ,modernization1 renovation1 and repair ,the term modernization1 renovation1 and repair means-- 7,a7 comprehensive assessments of facilities1 including indoor air-quality assessments1 to identify-- 7i7 facility conditions or deficiencies that could adversely affect student and staff health1 safety1 performance1 or productivity or energy1 water1 or materials efficiency2 and 7ii7 needed facility improvements2 7,b7 repairing1 replacing1 or installing roofs 7which may be extensive1 intensive1 or semi-intensive green roofs72 electrical wiring2 water supply and plumbing systems1 sewage systems1 storm water runoff systems1 lighting systems 7or components of such systems72 or building envelope1 windows1 ceilings1 flooring1 or doors1 including security doors2 7,c7 repairing1 replacing1 or installing heating1 ventilation1 or air conditioning systems1 or components of those systems 7including insulation7 to improve energy efficiency2 7,d7 compliance with fire1 health1 seismic1 and safety codes1 including professional installation of fire and life safety alarms1 and modernizations1 renovations1 and repairs that ensure that facilities are prepared for such emergencies as acts of terrorism1 campus violence1 and natural disasters1 such as improving building infrastructure to accommodate security measures and installing or upgrading technology to ensure that a school or incident is able to respond to such emergencies2 7,e7 making modifications necessary to make educational facilities accessible in compliance with the ,americans with ,disabilities ,act of #aiij 7#db ,u4,s4,c4 #abaja et seq47 and section #ejd of the ,rehabilitation ,act of #aigc 7#bi ,u4,s4,c4 #gid71 except that such modifications shall not be the primary use of a grant or subgrant2 7,f7 abatement1 removal1 or interim controls of asbestos1 polychlorinated biphenyls1 mold1 mildew1 or lead-based hazards1 including lead-based paint hazards2 7,g7 retrofitting necessary to increase energy efficiency2 7,h7 measures1 such as selection and substitution of products and materials1 and implementation of improved maintenance and operational procedures1 such as green cleaning programs1 to reduce or eliminate potential student or staff exposure to-- 7i7 volatile organic compounds2 7ii7 particles such as dust and pollens2 or 7iii7 combustion gases2 7,i7 modernization1 renovation1 or repair necessary to reduce the consumption of coal1 electricity1 land1 natural gas1 oil1 or water2 7,j7 installation or upgrading of educational technology infrastructure2 7,k7 installation or upgrading of renewable energy generation and heating systems1 including solar1 photovoltaic1 wind1 biomass 7including wood pellet and woody biomass71 waste-to-energy1 solar-thermal1 and geothermal systems1 and energy audits2 7,l7 modernization1 renovation1 or repair activities related to energy efficiency and renewable energy1 and improvements to building infrastructures to accommodate bicycle and pedestrian access2 7,m7 ground improvements1 storm water management1 landscaping1 and environmental clean-up when necessary2 7,n7 other modernization1 renovation1 or repair to-- 7i7 improve teachers' ability to teach and students' ability to learn2 7ii7 ensure the health and safety of students and staff2 or 7iii7 improve classroom1 laboratory1 and vocational facilities in order to enhance the quality of science1 technology1 engineering1 and mathematics instruction2 and 7,o7 required environmental remediation related to facilities modernization1 renovation1 or repair activities described in subparagraphs 7,a7 through 7,n74 7#g7 ,outlying area ,the term outlying area means the ,u4,s4 ,virgin ,islands1 ,guam1 ,american ,samoa1 the ,commonwealth of the ,northern ,mariana ,islands1 and the ,republic of ,palau4 7#h7 ,state ,the term ,state means each of the #ej ,states of the ,united ,states1 the ,commonwealth of ,puerto ,rico1 and the ,district of ,columbia4 #gda4 ,buy ,american ,section #afje of division ,a of the ,american ,recovery and ,reinvestment ,act of #bjji 7,public ,law #aaa-e7 applies to funds made available under this title4 ,c ,transportation ,infrastructure ,investments ,i ,immediate transportation infrastructure investments #gea4 ,immediate transportation infrastructure investments 7a7 ,grants-,in-,aid for airports 7#a7 ,in general ,there is made available to the ,secretary of ,transportation #f1jjj1jjj1jjj to carry out airport improvement under subchapter ,i of chapter #dga and subchapter ,i of chapter #dge of title #di1 ,united ,states ,code4 7#b7 ,federal share2 limitation on obligations ,the ,federal share payable of the costs for which a grant is made under this subsection1 shall be #ajj percent4 ,the amount made available under this subsection shall not be subject to any limitation on obligations for the ,grants-,in-,aid for ,airports program set forth in any ,act or in title #di1 ,united ,states ,code4 7#c7 ,distribution of funds ,funds provided to the ,secretary under this subsection shall not be subject to apportionment formulas1 special apportionment categories1 or minimum percentages under chapter #dga of such title4 7#d7 ,availability ,the amounts made available under this subsection shall be available for obligation until the date that is two years after the date of the enactment of this ,act4 ,the ,secretary shall obligate amounts totaling not less than #ej percent of the funds made available within one year of enactment and obligate remaining amounts not later than two years after enactment4 7#e7 ,administrative expenses ,of the funds made available under this subsection1 #j4c percent shall be available to the ,secretary for administrative expenses1 shall remain available for obligation until ,september #cj1 #bjae1 and may be used in conjunction with funds otherwise provided for the administration of the ,grants-,in-,aid for ,airports program4 7b7 ,next generation air traffic control advancements 7#a7 ,in general ,there is made available to the ,secretary of ,transportation #c1jjj1jjj1jjj for necessary ,federal ,aviation ,administration capital1 research1 and operating costs to carry out ,next ,generation air traffic control system advancements4 7#b7 ,availability ,the amounts made available under this subsection shall be available for obligation until the date that is two years after the date of the enactment of this ,act4 7c7 ,highway infrastructure investment 7#a7 ,in general ,there is made available to the ,secretary of ,transportation #ha1jjj1jjj1jjj for restoration1 repair1 construction and other activities eligible under section #acc7;b7 of title #bc1 ,united ,states ,code1 and for passenger and freight rail transportation and port infrastructure projects eligible for assistance under section #fja7;a77#h7 of title #bc4 7#b7 ,federal share2 limitation on obligations ,the ,federal share payable on account of any project or activity carried out with funds made available under this subsection shall be1 at the option of the recipient1 up to #ajj percent of the total cost thereof4 ,the amount made available under this subsection shall not be subject to any limitation on obligations for ,federal-aid highways and highway safety construction programs set forth in any ,act or in title #bc1 ,united ,states ,code4 7#c7 ,availability ,the amounts made available under this subsection shall be available for obligation until the date that is two years after the date of the enactment of this ,act4 ,the ,secretary shall obligate amounts totaling not less than #ej percent of the funds made available within one year of enactment and obligate remaining amounts not later than two years after enactment4 7#d7 ,distribution of funds ,of the funds provided in this subsection1 after making the set-asides required by paragraphs 7#i71 7#aj71 7#aa71 7#ab71 and 7#ae71 #ej percent of the funds shall be apportioned to ,states using the formula set forth in section #ajd7;b77#c7 of title #bc1 ,united ,states ,code1 and the remaining funds shall be apportioned to ,states in the same ratio as the obligation limitation for fiscal year #bjaj was distributed among the ,states in accordance with the formula specified in section #abj7;a77#f7 of division ,a of ,public ,law #aaa-aag4 7#e7 ,apportionment ,apportionments under paragraph 7#d7 shall be made not later than #cj days after the date of the enactment of this ,act4 7#f7 ,redistribution 7,a7 ,the ,secretary shall1 #ahj days following the date of apportionment1 withdraw from each ,state an amount equal to #ej percent of the funds apportioned under paragraph 7#d7 to that ,state 7excluding funds suballocated within the ,state7 less the amount of funding obligated 7excluding funds suballocated within the ,state71 and the ,secretary shall redistribute such amounts to other ,states that have had no funds withdrawn under this subparagraph in the manner described in section #abj7;c7 of division ,a of ,public ,law #aaa-aag4 7,b7 ,one year following the date of apportionment1 the ,secretary shall withdraw from each recipient of funds apportioned under paragraph 7#d7 any unobligated funds1 and the ,secretary shall redistribute such amounts to ,states that have had no funds withdrawn under this paragraph 7excluding funds suballocated within the ,state7 in the manner described in section #abj7;c7 of division ,a of ,public ,law #aaa-aag4 7,c7 ,at the request of a ,state1 the ,secretary may provide an extension of the one-year period only to the extent that the ,secretary determines that the ,state has encountered extreme conditions that create an unworkable bidding environment or other extenuating circumstances4 ,before granting an extension1 the ,secretary shall notify in writing the ,committee on ,transportation and ,infrastructure and the ,committee on ,environment and ,public ,works1 providing a thorough justification for the extension4 7#g7 ,puerto ,rico and territorial highway programs ,of the funds provided under this subsection1 #cae1jjj1jjj shall be set aside for the ,puerto ,rico highway program and #ace1jjj1jjj shall be for the territorial highway program authorized under section #afe of title #bc1 ,united ,states ,code4 7#h7 ,federal lands and ,indian reservations ,of the funds provided under this subsection1 #a1fej1jjj1jjj shall be set aside for investments in transportation at ,indian reservations and ,federal lands in accordance with the following34 7,a7 ,of the funds set aside by this paragraph1 #icj1jjj1jjj shall be for the ,indian ,reservation ,roads program1 #eaj1jjj1jjj shall be for the ,park ,roads and ,parkways program1 #ahj1jjj1jjj shall be for the ,forest ,highway ,program1 and #cj1jjj1jjj shall be for the ,refuge ,roads program4 7,b7 ,for investments at ,indian reservations and ,federal lands1 priority shall be given to capital investments1 and to projects and activities that can be completed within #b years of enactment of this ,act4 7,c7 ,one year following the enactment of this ,act1 to ensure the prompt use of the funding provided for investments at ,indian reservations and ,federal lands1 the ,secretary shall have the authority to redistribute unobligated funds within the respective program for which the funds were appropriated4 7,d7 ,up to four percent of the funding provided for ,indian ,reservation ,roads may be used by the ,secretary of the ,interior for program management and oversight and project-related administrative expenses4 7#i7 ,job training ,of the funds provided under this subsection1 #aej1jjj1jjj shall be set aside for the development and administration of transportation training programs under section #adj7;b7 title #bc1 ,united ,states ,code4 7,a7 ,funds set aside under this subsection shall be competitively awarded and used for the purpose of providing training1 apprenticeship 7including ,registered ,apprenticeship71 skill development1 and skill improvement programs1 as well as summer transportation institutes and may be transferred to1 or administered in partnership with1 the ,secretary of ,labor and shall demonstrate to the ,secretary of ,transportation program outcomes1 including-- 7i7 impact on areas with transportation workforce shortages2 7ii7 diversity of training participants2 7iii7 number of participants obtaining certifications or credentials required for specific types of employment2 7iv7 employment outcome metrics1 such as job placement and job retention rates1 established in consultation with the ,secretary of ,labor and consistent with metrics used by programs under the ,workforce ,investment ,act2 7v7 to the extent practical1 evidence that the program did not preclude workers that participate in training or apprenticeship activities under the program from being referred to1 or hired on1 projects funded under this chapter2 and 7vi7 identification of areas of collaboration with the ,department of ,labor programs1 including co-enrollment4 7,b7 ,to be eligible to receive a competitively awarded grant under this subsection1 a ,state must certify that at least #j4a percent of the amounts apportioned under the ,surface ,transportation ,program and ,bridge ,program will be obligated in the first fiscal year after enactment of this act for job training activities consistent with section #adj7;b7 of title #bc1 ,united ,states ,code4 7#aj7 ,disadvantaged business enterprises ,of the funds provided under this subsection1 #cj1jjj1jjj shall be set aside for training programs and assistance programs under section #adj7;c7 of title #bc1 ,united ,states ,code4 ,funds set aside under this paragraph should be allocated to businesses that have proven success in adding staff while effectively completing projects4 7#aa7 ,state planning and oversight expenses ,of amounts apportioned under paragraph 7#d7 of this subsection1 a ,state may use up to #j4e percent for activities related to projects funded under this subsection1 including activities eligible under sections #acd and #ace of title #bc1 ,united ,states ,code1 ,state administration of subgrants1 and ,state oversight of subrecipients4 7#ab7 ,conditions 7,a7 ,funds made available under this subsection shall be administered as if apportioned under chapter #a of title #bc1 ,united ,states ,code1 except for funds made available for investments in transportation at ,indian reservations and ,federal lands1 and for the territorial highway program1 which shall be administered in accordance with chapter #b of title #bc1 ,united ,states ,code1 and except for funds made available for disadvantaged business enterprises bonding assistance1 which shall be administered in accordance with chapter #c of title #di1 ,united ,states ,code4 7,b7 ,funds made available under this subsection shall not be obligated for the purposes authorized under section #aae7;b7 of title #bc1 ,united ,states ,code4 7,c7 ,funding provided under this subsection shall be in addition to any and all funds provided for fiscal years #bjaa and #bjab in any other ,act for ,federal-aid ,highways and shall not affect the distribution of funds provided for ,federal-aid ,highways in any other ,act4 7,d7 ,section #aaja7;b7 of ,public ,law #aji-ei shall apply to funds apportioned under this subsection4 7#ac7 ,oversight ,the ,administrator of the ,federal ,highway ,administration may set aside up to #j4ae percent of the funds provided under this subsection to fund the oversight by the ,administrator of projects and activities carried out with funds made available to the ,federal ,highway ,administration in this ,act1 and such funds shall be available through ,september #cj1 #bjae4 7d7 ,capital assistance for high speed rail corridors and intercity passenger rail service 7#a7 ,in general ,there is made available to the ,secretary of ,transportation #ab1jjj1jjj1jjj for grants for high-speed rail projects as authorized under sections #bfajd and #bfajf of title #di1 ,united ,states ,code1 capital investment grants to support intercity passenger rail service as authorized under section #bddjf of title #di1 ,united ,states ,code1 and congestion grants as authorized under section #bdaje of title #di1 ,united ,states ,code1 and to enter into cooperative agreements for these purposes as authorized1 except that the ,administrator of the ,federal ,railroad ,administration may retain up to one percent of the funds provided under this heading to fund the award and oversight by the ,administrator of grants made under this subsection1 which retained amount shall remain available for obligation until ,september #cj1 #bjae4 7#b7 ,availability ,the amounts made available under this subsection shall be available for obligation until the date that is two years after the date of the enactment of this ,act4 ,the ,secretary shall obligate amounts totaling not less than #ej percent of the funds made available within one year of enactment and obligate remaining amounts not later than two years after enactment4 7#c7 ,federal share ,the ,federal share payable of the costs for which a grant or cooperative agreements is made under this subsection shall be1 at the option of the recipient1 up to #ajj percent4 7#d7 ,interim guidance ,the ,secretary shall issue interim guidance to applicants covering application procedures and administer the grants provided under this subsection pursuant to that guidance until final regulations are issued4 7#e7 ,intercity passenger rail corridors ,not less than #he percent of the funds provided under this subsection shall be for cooperative agreements that lead to the development of entire segments or phases of intercity or high-speed rail corridors4 7#f7 ,conditions 7,a7 ,in addition to the provisions of title #di1 ,united ,states ,code1 that apply to each of the individual programs funded under this subsection1 subsections #bddjb7;a77#b71 #bddjb7;i71 and #bddjc7;a7 and 7c7 of title #di1 ,united ,states ,code1 shall also apply to the provision of funds provided under this subsection4 7,b7 ,a project need not be in a ,state rail plan developed under chapter #bbg of title #di1 ,united ,states ,code1 to be eligible for assistance under this subsection4 7,c7 ,recipients of grants under this paragraph shall conduct all procurement transactions using such grant funds in a manner that provides full and open competition1 as determined by the ,secretary1 in compliance with existing labor agreements4 7e7 ,capital grants to the national railroad passenger corporation 7#a7 ,in general ,there is made available #f1jjj1jjj1jjj to enable the ,secretary of ,transportation to make capital grants to the ,national ,railroad ,passenger ,corporation 7,amtrak71 as authorized by section #aja7;c7 of the ,passenger ,rail ,investment and ,improvement ,act of #bjjh 7,public ,law #aaj-dcb74 7#b7 ,availability ,the amounts made available under this subsection shall be available for obligation until the date that is two years after the date of the enactment of this ,act4 ,the ,secretary shall obligate amounts totaling not less than #ej percent of the funds made available within one year of enactment and obligate remaining amounts not later than two years after enactment4 7#c7 ,project priority ,the priority for the use of funds shall be given to projects for the repair1 rehabilitation1 or upgrade of railroad assets or infrastructure1 and for capital projects that expand passenger rail capacity including the rehabilitation of rolling stock4 7#d7 ,conditions 7,a7 ,none of the funds under this subsection shall be used to subsidize the operating losses of ,amtrak4 7,b7 ,the funds provided under this subsection shall be awarded not later than #ij days after the date of enactment of this ,act4 7,c7 ,the ,secretary shall take measures to ensure that projects funded under this subsection shall be completed within #b years of enactment of this ,act1 and shall serve to supplement and not supplant planned expenditures for such activities from other ,federal1 ,state1 local and corporate sources4 ,the ,secretary shall certify to the ,house and ,senate ,committees on ,appropriations in writing compliance with the preceding sentence4 7#e7 ,oversight ,the ,administrator of the ,federal ,railroad ,administration may set aside #j4e percent of the funds provided under this subsection to fund the oversight by the ,administrator of projects and activities carried out with funds made available in this subsection1 and such funds shall be available through ,september #cj1 #bjae4 7f7 ,transit capital assistance 7#a7 ,in general ,there is made available to the ,secretary of ,transportation #i1jjj1jjj1jjj for grants for transit capital assistance grants as defined by section #ecjb7;a77#c7 of title #di1 ,united ,states ,code4 ,notwithstanding any provision of chapter #ec of title #di1 however1 a recipient of funding under this subsection may use up to #aj percent of the amount provided for the operating costs of equipment and facilities for use in public transportation or for other eligible activities4 7#b7 ,federal share2 limitation on obligations ,the applicable requirements of chapter #ec of title #di1 ,united ,states ,code1 shall apply to funding provided under this subsection1 except that the ,federal share of the costs for which any grant is made under this subsection shall be1 at the option of the recipient1 up to #ajj percent4 ,the amount made available under this subsection shall not be subject to any limitation on obligations for transit programs set forth in any ,act or chapter #ec of title #di4 7#c7 ,availability ,the amounts made available under this subsection shall be available for obligation until the date that is two years after the date of the enactment of this ,act4 ,the ,secretary shall obligate amounts totaling not less than #ej percent of the funds made available within one year of enactment and obligate remaining amounts not later than two years after enactment4 7#d7 ,distribution of funds ,the ,secretary of ,transportation shall-- 7,a7 provide #hj percent of the funds appropriated under this subsection for grants under section #ecjg of title #di1 ,united ,states ,code1 and apportion such funds in accordance with section #eccf of such title2 7,b7 provide #aj percent of the funds appropriated under this subsection in accordance with section #ecdj of such title2 and 7,c7 provide #aj percent of the funds appropriated under this subsection for grants under section #ecaa of title #di1 ,united ,states ,code1 and apportion such funds in accordance with such section4 7#e7 ,apportionment ,the funds apportioned under this subsection shall be apportioned not later than #ba days after the date of the enactment of this ,act4 7#f7 ,redistribution 7,a7 ,the ,secretary shall1 #ahj days following the date of apportionment1 withdraw from each urbanized area or ,state an amount equal to #ej percent of the funds apportioned to such urbanized areas or ,states less the amount of funding obligated1 and the ,secretary shall redistribute such amounts to other urbanized areas or ,states that have had no funds withdrawn under this proviso utilizing whatever method he deems appropriate to ensure that all funds redistributed under this proviso shall be utilized promptly4 7,b7 ,one year following the date of apportionment1 the ,secretary shall withdraw from each urbanized area or ,state any unobligated funds1 and the ,secretary shall redistribute such amounts to other urbanized areas or ,states that have had no funds withdrawn under this proviso utilizing whatever method the ,secretary deems appropriate to ensure that all funds redistributed under this proviso shall be utilized promptly4 7,c7 ,at the request of an urbanized area or ,state1 the ,secretary of ,transportation may provide an extension of such #a-year period if the ,secretary determines that the urbanized area or ,state has encountered an unworkable bidding environment or other extenuating circumstances4 ,before granting an extension1 the ,secretary shall notify in writing the ,committee on ,transportation and ,infrastructure and the ,committee on ,banking1 ,housing and ,urban ,affairs1 providing a thorough justification for the extension4 7#g7 ,conditions 7,a7 ,of the funds provided for section #ecaa of title #di1 ,united ,states ,code1 #b4e percent shall be made available for section #ecaa7;c77#a74 7,b7 ,section #aaja7;b7 of ,public ,law #aji-ei shall apply to funds appropriated under this subsection4 7,c7 ,the funds appropriated under this subsection shall not be comingled with any prior year funds4 7#h7 ,oversight ,notwithstanding any other provision of law1 #j4c percent of the funds provided for grants under section #ecjg and section #ecdj1 and #j4c percent of the funds provided for grants under section #ecaa1 shall be available for administrative expenses and program management oversight1 and such funds shall be available through ,september #cj1 #bjae4 7g7 ,state of good repair 7#a7 ,in general ,there is made available to the ,secretary of ,transportation #ah1jjj1jjj1jjj for capital expenditures as authorized by section #ecji7;b77#e7 of title #di1 ,united ,states ,code4 7#b7 ,federal share ,the applicable requirements of chapter #ec of title #di1 ,united ,states ,code1 shall apply1 except that the ,federal share of the costs for which a grant is made under this subsection shall be1 at the option of the recipient1 up to #ajj percent4 7#c7 ,availability ,the amounts made available under this subsection shall be available for obligation until the date that is two years after the date of the enactment of this ,act4 ,the ,secretary shall obligate amounts totaling not less than #ej percent of the funds made available within one year of enactment and obligate remaining amounts not later than two years after enactment4 7#d7 ,distribution of funds 7,a7 ,the ,secretary of ,transportation shall apportion not less than #ge percent of the funds under this subsection for the modernization of fixed guideway systems1 pursuant to the formula set forth in section #eccf7;b7 title #di1 ,united ,states ,code1 other than subsection 7b77#b77;,a77ii74 7,b7 ,of the funds appropriated under this subsection1 not less than #be percent shall be available for the restoration or replacement of existing public transportation assets related to bus systems1 pursuant to the formula set forth in section #eccf other than subsection 7b74 7#e7 ,apportionment ,the funds made available under this subsection shall be apportioned not later than #cj days after the date of the enactment of this ,act4 7#f7 ,redistribution 7,a7 ,the ,secretary shall1 #ahj days following the date of apportionment1 withdraw from each urbanized area an amount equal to #ej percent of the funds apportioned to such urbanized area less the amount of funding obligated1 and the ,secretary shall redistribute such amounts to other urbanized areas that have had no funds withdrawn under this paragraph utilizing whatever method the ,secretary deems appropriate to ensure that all funds redistributed under this paragraph shall be utilized promptly4 7,b7 ,one year following the date of apportionment1 the ,secretary shall withdraw from each urbanized area any unobligated funds1 and the ,secretary shall redistribute such amounts to other urbanized areas that have had no funds withdrawn under this paragraph1 utilizing whatever method the ,secretary deems appropriate to ensure that all funds redistributed under this paragraph shall be utilized promptly4 7,c7 ,at the request of an urbanized area1 the ,secretary may provide an extension of the #a-year period if the ,secretary finds that the urbanized area has encountered an unworkable bidding environment or other extenuating circumstances4 ,before granting an extension1 the ,secretary shall notify the ,committee on ,transportation and ,infrastructure and the ,committee on ,banking1 ,housing1 and ,urban ,affairs1 providing a thorough justification for the extension4 7#g7 ,conditions 7,a7 ,the provisions of section #aaja7;b7 of ,public ,law #aji-ei shall apply to funds made available under this subsection4 7,b7 ,the funds appropriated under this subsection shall not be commingled with any prior year funds4 7#h7 ,oversight ,notwithstanding any other provision of law1 #j4c percent of the funds under this subsection shall be available for administrative expenses and program management oversight and shall remain available for obligation until ,september #cj1 #bjae4 7h7 ,transportation infrastructure grants and financing 7#a7 ,in general ,there is made available to the ,secretary of ,transportation #ae1jjj1jjj1jjj for capital investments in surface transportation infrastructure4 ,the ,secretary shall distribute funds provided under this subsection as discretionary grants to be awarded to ,state and local governments or transit agencies on a competitive basis for projects that will have a significant impact on the ,nation1 a metropolitan area1 or a region4 7#b7 ,federal share2 limitation on obligations ,the ,federal share payable of the costs for which a grant is made under this subsection1 shall be #ajj percent4 7#c7 ,availability ,the amounts made available under this subsection shall be available for obligation until the date that is two years after the date of the enactment of this ,act4 ,the ,secretary shall obligate amounts totaling not less than #ej percent of the funds made available within one year of enactment and obligate remaining amounts not later than two years after enactment4 7#d7 ,project eligibility ,projects eligible for funding provided under this subsection include-- 7,a7 highway or bridge projects eligible under title #bc1 ,united ,states ,code1 including interstate rehabilitation1 improvements to the rural collector road system1 the reconstruction of overpasses and interchanges1 bridge replacements1 seismic retrofit projects for bridges1 and road realignments2 7,b7 public transportation projects eligible under chapter #ec of title #di1 ,united ,states ,code1 including investments in projects participating in the ,new ,starts or ,small ,starts programs that will expedite the completion of those projects and their entry into revenue service2 7,c7 passenger and freight rail transportation projects2 and 7,d7 port infrastructure investments1 including projects that connect ports to other modes of transportation and improve the efficiency of freight movement4 7#e7 ,,tifia program ,the ,secretary may transfer to the ,federal ,highway ,administration funds made available under this subsection for the purpose of paying the subsidy and administrative costs of projects eligible for ,federal credit assistance under chapter #f of title #bc1 ,united ,states ,code1 if the ,secretary finds that such use of the funds would advance the purposes of this subsection4 7#f7 ,project priority ,the ,secretary shall give priority to projects that are expected to be completed within #c years of the date of the enactment of this ,act4 7#g7 ,deadline for issuance of competition criteria ,the ,secretary shall publish criteria on which to base the competition for any grants awarded under this subsection not later than #ij days after enactment of this ,act4 ,the ,secretary shall require applications for funding provided under this subsection to be submitted not later than #ahj days after the publication of the criteria1 and announce all projects selected to be funded from such funds not later than #a year after the date of the enactment of the ,act4 7#h7 ,applicability of title #dj ,each project conducted using funds provided under this subsection shall comply with the requirements of subchapter ,,iv of chapter #ca of title #dj1 ,united ,states ,code4 7#i7 ,administrative expenses ,the ,secretary may retain up to one half of one percent of the funds provided under this subsection1 and may transfer portions of those funds to the ,administrators of the ,federal ,highway ,administration1 the ,federal ,transit ,administration1 the ,federal ,railroad ,administration and the ,maritime ,administration1 to fund the award and oversight of grants made under this subsection4 ,funds retained shall remain available for obligation until ,september #cj1 #bjae4 7i7 ,local hiring 7#a7 ,in general ,in the case of the funding made available under subsections 7a7 through 7h7 of this section1 the ,secretary of ,transportation may establish standards under which a contract for construction may be advertised that contains requirements for the employment of individuals residing in or adjacent to any of the areas in which the work is to be performed to perform construction work required under the contract1 provided that-- 7,a7 all or part of the construction work performed under the contract occurs in an area designated by the ,secretary as an area of high unemployment1 using data reported by the ,united ,states ,department of ,labor1 ,bureau of ,labor ,statistics2 7,b7 the estimated cost of the project of which the contract is a part is greater than #aj1jjj1jjj1 except that the estimated cost of the project in the case of construction funded under subsection 7c7 shall be greater than #ej1jjj1jjj2 and 7,c7 the recipient may not require the hiring of individuals who do not have the necessary skills to perform work in any craft or trade2 provided that the recipient may require the hiring of such individuals if the recipient establishes reasonable provisions to train such individuals to perform any such work under the contract effectively4 7#b7 ,project standards ,any standards established by the ,secretary under this section shall ensure that any requirements specified under subsection 7c77#i7-- 7,a7 do not compromise the quality of the project2 7,b7 are reasonable in scope and application2 7,c7 do not unreasonably delay the completion of the project2 and 7,d7 do not unreasonably increase the cost of the project4 7#c7 ,implementing regulations ,the ,secretary shall promulgate final regulations to implement the authority of this subsection4 7j7 ,administrative provisions 7#a7 ,applicability of title #dj ,each project conducted using funds provided under this subtitle shall comply with the requirements of subchapter ,,iv of chapter #ca of title #dj1 ,united ,states ,code4 7#b7 ,buy ,american ,section #afje of division ,a of the ,american ,recovery and ,reinvestment ,act of #bjji 7,public ,law #aaa-e7 applies to each project conducted using funds provided under this subtitle4 ,,ii ,building and upgrading infrastructure for long-,term development ,a ,immediate transportation infrastructure investments #gfa4 ,short title ,this part may be cited as the ,building and ,upgrading ,infrastructure for ,long-,term ,development ,act4 #gfb4 ,findings and purpose 7a7 ,findings ,congress finds that-- 7#a7 infrastructure has always been a vital element of the economic strength of the ,united ,states and a key indicator of the international leadership of the ,united ,states2 7#b7 the ,erie ,canal1 the ,hoover ,dam1 the railroads1 and the interstate highway system are all testaments to ,american ingenuity and have helped propel and maintain the ,united ,states as the world's largest economy2 7#c7 according to the ,world ,economic ,forum's ,global ,competitiveness ,report1 the ,united ,states fell to second place in #bjji1 and dropped to fourth place overall in #bjaj1 however1 in the ,quality of overall infrastructure category of the same report1 the ,united ,states ranked twenty-third in the world2 7#d7 according to the ,world ,bank's #bjaj ,logistic ,performance ,index1 the capacity of countries to efficiently move goods and connect manufacturers and consumers with international markets is improving around the world1 and the ,united ,states now ranks seventh in the world in logistics-related infrastructure behind countries from both ,europe and ,asia2 7#e7 according to a ,january #bjji report from the ,university of ,massachusetts_/,alliance for ,american ,manufacturing entitled ,employment1 ,productivity and ,growth1 infrastructure investment is a highly effective engine of job creation2 7#f7 according to the ,american ,society of ,civil ,engineers1 the current condition of the infrastructure in the ,united ,states earns a grade point average of ,d1 and an estimated #b1bjj1jjj1jjj1jjj investment is needed over the next #e years to bring ,american infrastructure up to adequate condition2 7#g7 according to the ,national ,surface ,transportation ,policy and ,revenue ,study ,commission1 #bbe1jjj1jjj1jjj is needed annually from all sources for the next #ej years to upgrade the ,united ,states surface transportation system to a state of good repair and create a more advanced system2 7#h7 the current infrastructure financing mechanisms of the ,united ,states1 both on the ,federal and ,state level1 will fail to meet current and foreseeable demands and will create large funding gaps2 7#i7 published reports state that there may not be enough demand for municipal bonds to maintain the same level of borrowing at the same rates1 resulting in significantly decreased infrastructure investment at the ,state and local level2 7#aj7 current funding mechanisms are not readily scalable and do not-- 7,a7 serve large in-,state or cross jurisdiction infrastructure projects1 projects of regional or national significance1 or projects that cross sector silos2 7,b7 sufficiently catalyze private sector investment2 or 7,c7 ensure the optimal return on public resources2 7#aa7 although grant programs of the ,united ,states ,government must continue to play a central role in financing the transportation1 environment1 and energy infrastructure needs of the ,united ,states1 current and foreseeable demands on existing ,federal1 ,state1 and local funding for infrastructure expansion clearly exceed the resources to support these programs by margins wide enough to prompt serious concerns about the ,united ,states ability to sustain long-term economic development1 productivity1 and international competitiveness2 7#ab7 the capital markets1 including pension funds1 private equity funds1 mutual funds1 sovereign wealth funds1 and other investors1 have a growing interest in infrastructure investment and represent hundreds of billions of dollars of potential investment2 and 7#ac7 the establishment of a ,united ,states ,government-owned1 independent1 professionally managed institution that could provide credit support to qualified infrastructure projects of regional and national significance1 making transparent merit-based investment decisions based on the commercial viability of infrastructure projects1 would catalyze the participation of significant private investment capital4 7b7 ,purpose ,the purpose of this part is to facilitate investment in1 and long-term financing of1 economically viable infrastructure projects of regional or national significance in a manner that both complements existing ,federal1 ,state1 local1 and private funding sources for these projects and introduces a merit-based system for financing such projects1 in order to mobilize significant private sector investment1 create jobs1 and ensure ,united ,states competitiveness through an institution that limits the need for ongoing ,federal funding4 #gfc4 ,definitions ,for purposes of this part1 the following definitions shall apply3 7#a7 ,,aifa ,the term ,,aifa means the ,american ,infrastructure ,financing ,authority established under this part4 7#b7 ,blind trust ,the term blind trust means a trust in which the beneficiary has no knowledge of the specific holdings and no rights over how those holdings are managed by the fiduciary of the trust prior to the dissolution of the trust4 7#c7 ,board of directors ,the term ,board of ,directors means ,board of ,directors of ,,aifa4 7#d7 ,chairperson ,the term ,chairperson means the ,chairperson of the ,board of ,directors of ,,aifa4 7#e7 ,chief executive officer ,the term chief executive officer means the chief executive officer of ,,aifa1 appointed under section #gfg4 7#f7 ,cost ,the term cost has the same meaning as in section #ejb of the ,federal ,credit ,reform ,act of #aiij 7#b ,u4,s4,c4 #ffa;a74 7#g7 ,direct loan ,the term direct loan has the same meaning as in section #ejb of the ,federal ,credit ,reform ,act of #aiij 7#b ,u4,s4,c4 #ffa;a74 7#h7 ,eligible entity ,the term eligible entity means an individual1 corporation1 partnership 7including a public-private partnership71 joint venture1 trust1 ,state1 or other non-,federal governmental entity1 including a political subdivision or any other instrumentality of a ,state1 or a revolving fund4 7#i7 ,infrastructure project 7,a7 ,in general ,the term eligible infrastructure project means any non-,federal transportation1 water1 or energy infrastructure project1 or an aggregation of such infrastructure projects1 as provided in this part4 7,b7 ,transportation infrastructure project ,the term transportation infrastructure project means the construction1 alteration1 or repair1 including the facilitation of intermodal transit1 of the following subsectors3 7i7 ,highway or road4 7ii7 ,bridge4 7iii7 ,mass transit4 7iv7 ,inland waterways4 7v7 ,commercial ports4 7vi7 ,airports4 7vii7 ,air traffic control systems4 7viii7 ,passenger rail1 including high-speed rail4 7ix7 ,freight rail systems4 7,c7 ,water infrastructure project ,the term water infrastructure project means the construction1 consolidation1 alteration1 or repair of the following subsectors3 7i7 ,waterwaste treatment facility4 7ii7 ,storm water management system4 7iii7 ,dam4 7iv7 ,solid waste disposal facility4 7v7 ,drinking water treatment facility4 7vi7 ,levee4 7vii7 ,open space management system4 7,d7 ,energy infrastructure project ,the term energy infrastructure project means the construction1 alteration1 or repair of the following subsectors3 7i7 ,pollution reduced energy generation4 7ii7 ,transmission and distribution4 7iii7 ,storage4 7iv7 ,energy efficiency enhancements for buildings1 including public and commercial buildings4 7,e7 ,board authority to modify subsectors ,the ,board of ,directors may make modifications1 at the discretion of the ,board1 to the subsectors described in this paragraph by a vote of not fewer than #e of the voting members of the ,board of ,directors4 7#aj7 ,investment prospectus 7,a7 ,the term investment prospectus means the processes and publications described below that will guide the priorities and strategic focus for the ,bank's investments4 ,the investment prospectus shall follow rulemaking procedures under section #eec of title #e1 ,united ,states ,code4 7,b7 ,the ,bank shall publish a detailed description of its strategy in an ,investment ,prospectus within one year of the enactment of this subchapter4 ,the ,investment ,prospectus shall-- 7i7 specify what the ,bank shall consider significant to the economic competitiveness of the ,united ,states or a region thereof in a manner consistent with the primary objective2 7ii7 specify the priorities and strategic focus of the ,bank in forwarding its strategic objectives and carrying out the ,bank strategy2 7iii7 specify the priorities and strategic focus of the ,bank in promoting greater efficiency in the movement of freight2 7iv7 specify the priorities and strategic focus of the ,bank in promoting the use of innovation and best practices in the planning1 design1 development and delivery of projects2 7v7 describe in detail the framework and methodology for calculating application qualification scores and associated ranges as specified in this subchapter1 along with the data to be requested from applicants and the mechanics of calculations to be applied to that data to determine qualification scores and ranges2 7vi7 describe how selection criteria will be applied by the ,chief ,executive ,officer in determining the competitiveness of an application and its qualification score and range relative to other current applications and previously funded applications2 and 7vii7 describe how the qualification score and range methodology and project selection framework are consistent with maximizing the ,bank goals in both urban and rural areas4 7,c7 ,the ,investment ,prospectus and any subsequent updates thereto shall be approved by a majority vote of the ,board of ,directors prior to publication4 7,d7 ,the ,bank shall update the ,investment ,prospectus on every biennial anniversary of its original publication4 7#aa7 ,investment-grade rating ,the term investment-grade rating means a rating of ,,bbb minus1 ,baa#c1 or higher assigned to an infrastructure project by a ratings agency4 7#ab7 ,loan guarantee ,the term loan guarantee has the same meaning as in section #ejb of the ,federal ,credit ,reform ,act of #aiij 7#b ,u4,s4,c4 #ffa;a74 7#ac7 ,public-private partnership ,the term public-private partnership means any eligible entity-- 7,a7 7i7 which is undertaking the development of all or part of an infrastructure project that will have a public benefit1 pursuant to requirements established in one or more contracts between the entity and a ,state or an instrumentality of a ,state2 or 7ii7 the activities of which1 with respect to such an infrastructure project1 are subject to regulation by a ,state or any instrumentality of a ,state2 7,b7 which owns1 leases1 or operates or will own1 lease1 or operate1 the project in whole or in part2 and 7,c7 the participants in which include not fewer than #a nongovernmental entity with significant investment and some control over the project or project vehicle4 7#ad7 ,rural infrastructure project ,the term rural infrastructure project means an infrastructure project in a rural area1 as that term is defined in section #cdc7;a77#ac77;,a7 of the ,consolidated ,farm and ,rural ,development ,act 7#g ,u4,s4,c4 #aiia7;a77#ac77;,a774 7#ae7 ,secretary ,unless the context otherwise requires1 the term ,secretary means the ,secretary of the ,treasury or the designee thereof4 7#af7 ,senior management ,the term senior management means the chief financial officer1 chief risk officer1 chief compliance officer1 general counsel1 chief lending officer1 and chief operations officer of ,,aifa established under section #gfi1 and such other officers as the ,board of ,directors may1 by majority vote1 add to senior management4 7#ag7 ,state ,the term ,state includes the ,district of ,columbia1 ,puerto ,rico1 ,guam1 ,american ,samoa1 the ,virgin ,islands1 the ,commonwealth of ,northern ,mariana ,islands1 and any other territory of the ,united ,states4 ,b ,american ,infrastructure ,financing ,authority #gfe4 ,establishment and general authority of ,,aifa 7a7 ,establishment of ,,aifa ,the ,american ,infrastructure ,financing ,authority is established as a wholly owned ,government corporation4 7b7 ,general authority of ,,aifa ,,aifa shall provide direct loans and loan guarantees to facilitate infrastructure projects that are both economically viable and of regional or national significance1 and shall have such other authority1 as provided in this part4 7c7 ,incorporation 7#a7 ,in general ,the ,board of ,directors first appointed shall be deemed the incorporator of ,,aifa1 and the incorporation shall be held to have been effected from the date of the first meeting of the ,board of ,directors4 7#b7 ,corporate office ,,aifa shall-- 7,a7 maintain an office in ,washington1 ,,dc2 and 7,b7 for purposes of venue in civil actions1 be considered to be a resident of ,washington1 ,,dc4 7d7 ,responsibility of the secretary ,the ,secretary shall take such action as may be necessary to assist in implementing ,,aifa1 and in carrying out the purpose of this part4 7e7 ,rule of construction ,chapter #ia of title #ca1 ,united ,states ,code1 does not apply to ,,aifa1 unless otherwise specifically provided in this part4 #gff4 ,voting members of the ,board of ,directors 7a7 ,voting membership of the board of directors 7#a7 ,in general ,,aifa shall have a ,board of ,directors consisting of #g voting members appointed by the ,president1 by and with the advice and consent of the ,senate1 not more than #d of whom shall be from the same political party4 7#b7 ,chairperson ,one of the voting members of the ,board of ,directors shall be designated by the ,president to serve as ,chairperson thereof4 7#c7 ,congressional recommendations ,not later than #cj days after the date of enactment of this ,act1 the majority leader of the ,senate1 the minority leader of the ,senate1 the ,speaker of the ,house of ,representatives1 and the minority leader of the ,house of ,representatives shall each submit a recommendation to the ,president for appointment of a member of the ,board of ,directors1 after consultation with the appropriate committees of ,congress4 7b7 ,voting rights ,each voting member of the ,board of ,directors shall have an equal vote in all decisions of the ,board of ,directors4 7c7 ,qualifications of voting members ,each voting member of the ,board of ,directors shall-- 7#a7 be a citizen of the ,united ,states2 and 7#b7 have significant demonstrated expertise in-- 7,a7 the management and administration of a financial institution relevant to the operation of ,,aifa2 or a public financial agency or authority2 7,b7 the financing1 development1 or operation of infrastructure projects2 or 7,c7 analyzing the economic benefits of infrastructure investment4 7d7 ,terms 7#a7 ,in general ,except as otherwise provided in this part1 each voting member of the ,board of ,directors shall be appointed for a term of #d years4 7#b7 ,initial staggered terms ,of the voting members first appointed to the ,board of ,directors-- 7,a7 the initial ,chairperson and #c of the other voting members shall each be appointed for a term of #d years2 and 7,b7 the remaining #c voting members shall each be appointed for a term of #b years4 7#c7 ,date of initial nominations ,the initial nominations for the appointment of all voting members of the ,board of ,directors shall be made not later than #fj days after the date of enactment of this ,act4 7#d7 ,beginning of term ,the term of each of the initial voting members appointed under this section shall commence immediately upon the date of appointment1 except that1 for purposes of calculating the term limits specified in this subsection1 the initial terms shall each be construed as beginning on ,january #bb of the year following the date of the initial appointment4 7#e7 ,vacancies ,a vacancy in the position of a voting member of the ,board of ,directors shall be filled by the ,president1 and a member appointed to fill a vacancy on the ,board of ,directors occurring before the expiration of the term for which the predecessor was appointed shall be appointed only for the remainder of that term4 7e7 ,meetings 7#a7 ,open to the public2 notice ,except as provided in paragraph 7#c71 all meetings of the ,board of ,directors shall be-- 7,a7 open to the public2 and 7,b7 preceded by reasonable public notice4 7#b7 ,frequency ,the ,board of ,directors shall meet not later than #fj days after the date on which all members of the ,board of ,directors are first appointed1 at least quarterly thereafter1 and otherwise at the call of either the ,chairperson or #e voting members of the ,board of ,directors4 7#c7 ,exception for closed meetings ,the voting members of the ,board of ,directors may1 by majority vote1 close a meeting to the public if1 during the meeting to be closed1 there is likely to be disclosed proprietary or sensitive information regarding an infrastructure project under consideration for assistance under this part4 ,the ,board of ,directors shall prepare minutes of any meeting that is closed to the public1 and shall make such minutes available as soon as practicable1 not later than #a year after the date of the closed meeting1 with any necessary redactions to protect any proprietary or sensitive information4 7#d7 ,quorum ,for purposes of meetings of the ,board of ,directors1 #e voting members of the ,board of ,directors shall constitute a quorum4 7f7 ,compensation of members ,each voting member of the ,board of ,directors shall be compensated at a rate equal to the daily equivalent of the annual rate of basic pay prescribed for level ,,iii of the ,executive ,schedule under section #ecad of title #e1 ,united ,states ,code1 for each day 7including travel time7 during which the member is engaged in the performance of the duties of the ,board of ,directors4 7g7 ,conflicts of interest ,a voting member of the ,board of ,directors may not participate in any review or decision affecting an infrastructure project under consideration for assistance under this part1 if the member has or is affiliated with an entity who has a financial interest in such project4 #gfg4 ,chief executive officer of ,,aifa 7a7 ,in general ,the chief executive officer of ,,aifa shall be a nonvoting member of the ,board of ,directors1 who shall be responsible for all activities of ,,aifa1 and shall support the ,board of ,directors as set forth in this part and as the ,board of ,directors deems necessary or appropriate4 7b7 ,appointment and tenure of the chief executive officer 7#a7 ,in general ,the ,president shall appoint the chief executive officer1 by and with the advice and consent of the ,senate4 7#b7 ,term ,the chief executive officer shall be appointed for a term of #f years4 7#c7 ,vacancies ,any vacancy in the office of the chief executive officer shall be filled by the ,president1 and the person appointed to fill a vacancy in that position occurring before the expiration of the term for which the predecessor was appointed shall be appointed only for the remainder of that term4 7c7 ,qualifications ,the chief executive officer-- 7#a7 shall have significant expertise in management and administration of a financial institution1 or significant expertise in the financing and development of infrastructure projects1 or significant expertise in analyzing the economic benefits of infrastructure investment2 and 7#b7 may not-- 7,a7 hold any other public office2 7,b7 have any financial interest in an infrastructure project then being considered by the ,board of ,directors1 unless that interest is placed in a blind trust2 or 7,c7 have any financial interest in an investment institution or its affiliates or any other entity seeking or likely to seek financial assistance for any infrastructure project from ,,aifa1 unless any such interest is placed in a blind trust for the tenure of the service of the chief executive officer plus #b additional years4 7d7 ,responsibilities ,the chief executive officer shall have such executive functions1 powers1 and duties as may be prescribed by this part1 the bylaws of ,,aifa1 or the ,board of ,directors1 including-- 7#a7 responsibility for the development and implementation of the strategy of ,,aifa1 including-- 7,a7 the development and submission to the ,board of ,directors of the investment prospectus1 the annual business plans and budget2 7,b7 the development and submission to the ,board of ,directors of a long-term strategic plan2 and 7,c7 the development1 revision1 and submission to the ,board of ,directors of internal policies2 and 7#b7 responsibility for the management and oversight of the daily activities1 decisions1 operations1 and personnel of ,,aifa1 including-- 7,a7 the appointment of senior management1 subject to approval by the voting members of the ,board of ,directors1 and the hiring and termination of all other ,,aifa personnel2 7,b7 requesting the detail1 on a reimbursable basis1 of personnel from any ,federal agency having specific expertise not available from within ,,aifa1 following which request the head of the ,federal agency may detail1 on a reimbursable basis1 any personnel of such agency reasonably requested by the chief executive officer2 7,c7 assessing and recommending in the first instance1 for ultimate approval or disapproval by the ,board of ,directors1 compensation and adjustments to compensation of senior management and other personnel of ,,aifa as may be necessary for carrying out the functions of ,,aifa2 7,d7 ensuring1 in conjunction with the general counsel of ,,aifa1 that all activities of ,,aifa are carried out in compliance with applicable law2 7,e7 overseeing the involvement of ,,aifa in all projects1 including-- 7i7 developing eligible projects for ,,aifa financial assistance2 7ii7 determining the terms and conditions of all financial assistance packages2 7iii7 monitoring all infrastructure projects assisted by ,,aifa1 including responsibility for ensuring that the proceeds of any loan made1 guaranteed1 or participated in are used only for the purposes for which the loan or guarantee was made2 7iv7 preparing and submitting for approval by the ,board of ,directors the documents required under paragraph 7#a72 and 7v7 ensuring the implementation of decisions of the ,board of ,directors2 and 7,f7 such other activities as may be necessary or appropriate in carrying out this part4 7e7 ,compensation 7#a7 ,in general ,any compensation assessment or recommendation by the chief executive officer under this section shall be without regard to the provisions of chapter #ea or subchapter ,,iii of chapter #ec of title #e1 ,united ,states ,code4 7#b7 ,considerations ,the compensation assessment or recommendation required under this subsection shall take into account merit principles1 where applicable1 as well as the education1 experience1 level of responsibility1 geographic differences1 and retention and recruitment needs in determining compensation of personnel4 #gfh4 ,powers and duties of the ,board of ,directors ,the ,board of ,directors shall-- 7#a7 as soon as is practicable after the date on which all members are appointed1 approve or disapprove senior management appointed by the chief executive officer2 7#b7 not later than #ahj days after the date on which all members are appointed-- 7,a7 develop and approve the bylaws of ,,aifa1 including bylaws for the regulation of the affairs and conduct of the business of ,,aifa1 consistent with the purpose1 goals1 objectives1 and policies set forth in this part2 7,b7 establish subcommittees1 including an audit committee that is composed solely of members of the ,board of ,directors who are independent of the senior management of ,,aifa2 7,c7 develop and approve1 in consultation with senior management1 a conflict-of-interest policy for the ,board of ,directors and for senior management2 7,d7 approve or disapprove internal policies that the chief executive officer shall submit to the ,board of ,directors1 including-- 7i7 policies regarding the loan application and approval process1 including-- 7,i7 disclosure and application procedures to be followed by entities in the course of nominating infrastructure projects for assistance under this part2 7,,ii7 guidelines for the selection and approval of projects2 7,,iii7 specific criteria for determining eligibility for project selection1 consistent with title ,,ii2 and 7,,iv7 standardized terms and conditions1 fee schedules1 or legal requirements of a contract or program1 so as to carry out this part2 and 7ii7 operational guidelines2 and 7,e7 approve or disapprove a multi-year or #a-year business plan and budget for ,,aifa2 7#c7 ensure that ,,aifa is at all times operated in a manner that is consistent with this part1 by-- 7,a7 monitoring and assessing the effectiveness of ,,aifa in achieving its strategic goals2 7,b7 periodically reviewing internal policies2 7,c7 reviewing and approving annual business plans1 annual budgets1 and long-term strategies submitted by the chief executive officer2 7,d7 reviewing and approving annual reports submitted by the chief executive officer2 7,e7 engaging one or more external auditors1 as set forth in this part2 and 7,f7 reviewing and approving all changes to the organization of senior management2 7#d7 appoint and fix1 by a vote of #e of the #g voting members of the ,board of ,directors1 and without regard to the provisions of chapter #ea or subchapter ,,iii of chapter #ec of title #e1 ,united ,states ,code1 the compensation and adjustments to compensation of all ,,aifa personnel1 provided that in appointing and fixing any compensation or adjustments to compensation under this paragraph1 the ,board shall-- 7,a7 consult with1 and seek to maintain comparability with1 other comparable ,federal personnel2 7,b7 consult with the ,office of ,personnel ,management2 and 7,c7 carry out such duties consistent with merit principles1 where applicable1 as well as the education1 experience1 level of responsibility1 geographic differences1 and retention and recruitment needs in determining compensation of personnel2 7#e7 establish such other criteria1 requirements1 or procedures as the ,board of ,directors may consider to be appropriate in carrying out this part2 7#f7 serve as the primary liaison for ,,aifa in interactions with ,congress1 the ,executive ,branch1 and ,state and local governments1 and to represent the interests of ,,aifa in such interactions and others2 7#g7 approve by a vote of #e of the #g voting members of the ,board of ,directors any changes to the bylaws or internal policies of ,,aifa2 7#h7 have the authority and responsibility-- 7,a7 to oversee entering into and carry out such contracts1 leases1 cooperative agreements1 or other transactions as are necessary to carry out this part with-- 7i7 any ,federal department or agency2 7ii7 any ,state1 territory1 or possession 7or any political subdivision thereof1 including ,state infrastructure banks7 of the ,united ,states2 and 7iii7 any individual1 public-private partnership1 firm1 association1 or corporation2 7,b7 to approve of the acquisition1 lease1 pledge1 exchange1 and disposal of real and personal property by ,,aifa and otherwise approve the exercise by ,,aifa of all of the usual incidents of ownership of property1 to the extent that the exercise of such powers is appropriate to and consistent with the purposes of ,,aifa2 7,c7 to determine the character of1 and the necessity for1 the obligations and expenditures of ,,aifa1 and the manner in which the obligations and expenditures will be incurred1 allowed1 and paid1 subject to this part and other ,federal law specifically applicable to wholly owned ,federal corporations2 7,d7 to execute1 in accordance with applicable bylaws and regulations1 appropriate instruments2 7,e7 to approve other forms of credit enhancement that ,,aifa may provide to eligible projects1 as long as the forms of credit enhancements are consistent with the purposes of this part and terms set forth in title ,,ii2 7,f7 to exercise all other lawful powers which are necessary or appropriate to carry out1 and are consistent with1 the purposes of ,,aifa2 7,g7 to sue or be sued in the corporate capacity of ,,aifa in any court of competent jurisdiction2 7,h7 to indemnify the members of the ,board of ,directors and officers of ,,aifa for any liabilities arising out of the actions of the members and officers in such capacity1 in accordance with1 and subject to the limitations contained in this part2 7,i7 to review all financial assistance packages to all eligible infrastructure projects1 as submitted by the chief executive officer and to approve1 postpone1 or deny the same by majority vote2 7,j7 to review all restructuring proposals submitted by the chief executive officer1 including assignation1 pledging1 or disposal of the interest of ,,aifa in a project1 including payment or income from any interest owned or held by ,,aifa1 and to approve1 postpone1 or deny the same by majority vote2 and 7,k7 to enter into binding commitments1 as specified in approved financial assistance packages2 7#i7 delegate to the chief executive officer those duties that the ,board of ,directors deems appropriate1 to better carry out the powers and purposes of the ,board of ,directors under this section2 and 7#aj7 to approve a maximum aggregate amount of outstanding obligations of ,,aifa at any given time1 taking into consideration funding1 and the size of ,,aifa's addressable market for infrastructure projects4 #gfi4 ,senior management 7a7 ,in general ,senior management shall support the chief executive officer in the discharge of the responsibilities of the chief executive officer4 7b7 ,appointment of senior management ,the chief executive officer shall appoint such senior managers as are necessary to carry out the purpose of ,,aifa1 as approved by a majority vote of the voting members of the ,board of ,directors4 7c7 ,term ,each member of senior management shall serve at the pleasure of the chief executive officer and the ,board of ,directors4 7d7 ,removal of senior management ,any member of senior management may be removed1 either by a majority of the voting members of the ,board of ,directors upon request by the chief executive officer1 or otherwise by vote of not fewer than #e voting members of the ,board of ,directors4 7e7 ,senior management 7#a7 ,in general ,each member of senior management shall report directly to the chief executive officer1 other than the ,chief ,risk ,officer1 who shall report directly to the ,board of ,directors4 7#b7 ,duties and responsibilities 7,a7 ,chief financial officer ,the ,chief ,financial ,officer shall be responsible for all financial functions of ,,aifa1 provided that1 at the discretion of the ,board of ,directors1 specific functions of the ,chief ,financial ,officer may be delegated externally4 7,b7 ,chief risk officer ,the ,chief ,risk ,officer shall be responsible for all functions of ,,aifa relating to-- 7i7 the creation of financial1 credit1 and operational risk management guidelines and policies2 7ii7 credit analysis for infrastructure projects2 7iii7 the creation of conforming standards for infrastructure finance agreements2 7iv7 the monitoring of the financial1 credit1 and operational exposure of ,,aifa2 and 7v7 risk management and mitigation actions1 including by reporting such actions1 or recommendations of such actions to be taken1 directly to the ,board of ,directors4 7,c7 ,chief compliance officer ,the ,chief ,compliance ,officer shall be responsible for all functions of ,,aifa relating to internal audits1 accounting safeguards1 and the enforcement of such safeguards and other applicable requirements4 7,d7 ,general counsel ,the ,general ,counsel shall be responsible for all functions of ,,aifa relating to legal matters and1 in consultation with the chief executive officer1 shall be responsible for ensuring that ,,aifa complies with all applicable law4 7,e7 ,chief operations officer ,the ,chief ,operations ,officer shall be responsible for all operational functions of ,,aifa1 including those relating to the continuing operations and performance of all infrastructure projects in which ,,aifa retains an interest and for all ,,aifa functions related to human resources4 7,f7 ,chief lending officer ,the ,chief ,lending ,officer shall be responsible for-- 7i7 all functions of ,,aifa relating to the development of project pipeline1 financial structuring of projects1 selection of infrastructure projects to be reviewed by the ,board of ,directors1 preparation of infrastructure projects to be presented to the ,board of ,directors1 and set aside for rural infrastructure projects2 7ii7 the creation and management of-- 7,i7 a ,center for ,excellence to provide technical assistance to public sector borrowers in the development and financing of infrastructure projects2 and 7,,ii7 an ,office of ,rural ,assistance to provide technical assistance in the development and financing of rural infrastructure projects2 and 7iii7 the establishment of guidelines to ensure diversification of lending activities by region1 infrastructure project type1 and project size4 7f7 ,changes to senior management ,the ,board of ,directors1 in consultation with the chief executive officer1 may alter the structure of the senior management of ,,aifa at any time to better accomplish the goals1 objectives1 and purposes of ,,aifa1 provided that the functions of the ,chief ,financial ,officer set forth in subsection 7e7 remain separate from the functions of the ,chief ,risk ,officer set forth in subsection 7e74 7g7 ,conflicts of interest ,no individual appointed to senior management may-- 7#a7 hold any other public office2 7#b7 have any financial interest in an infrastructure project then being considered by the ,board of ,directors1 unless that interest is placed in a blind trust2 or 7#c7 have any financial interest in an investment institution or its affiliates1 ,,aifa or its affiliates1 or other entity then seeking or likely to seek financial assistance for any infrastructure project from ,,aifa1 unless any such interest is placed in a blind trust during the term of service of that individual in a senior management position1 and for a period of #b years thereafter4 #ggj4 ,special ,inspector ,general for ,,aifa 7a7 ,in general ,during the first #e operating years of ,,aifa1 the ,office of the ,inspector ,general of the ,department of the ,treasury shall have responsibility for ,,aifa4 7b7 ,office of the special inspector general ,effective #e years after the date of enactment of the commencement of the operations of ,,aifa1 there is established the ,office of the ,special ,inspector ,general for ,,aifa4 7c7 ,appointment of ,inspector ,general2 ,removal 7#a7 ,head of office ,the head of the ,office of the ,special ,inspector ,general for ,,aifa shall be the ,special ,inspector ,general for ,,aifa 7in this part referred to as the ,special ,inspector ,general71 who shall be appointed by the ,president1 by and with the advice and consent of the ,senate4 7#b7 ,basis of appointment ,the appointment of the ,special ,inspector ,general shall be made on the basis of integrity and demonstrated ability in accounting1 auditing1 financial analysis1 law1 management analysis1 public administration1 or investigations4 7#c7 ,timing of nomination ,the nomination of an individual as ,special ,inspector ,general shall be made as soon as is practicable after the effective date under subsection 7b74 7#d7 ,removal ,the ,special ,inspector ,general shall be removable from office in accordance with the provisions of section #c7;b7 of the ,inspector ,general ,act of #aigh 7#e ,u4,s4,c4 ,app474 7#e7 ,rule of construction ,for purposes of section #gcbd of title #e1 ,united ,states ,code1 the ,special ,inspector ,general shall not be considered an employee who determines policies to be pursued by the ,united ,states in the nationwide administration of ,federal law4 7#f7 ,rate of pay ,the annual rate of basic pay of the ,special ,inspector ,general shall be the annual rate of basic pay for an ,inspector ,general under section #c7;e7 of the ,inspector ,general ,act of #aigh 7#e ,u4,s4,c4 ,app474 7d7 ,duties 7#a7 ,in general ,it shall be the duty of the ,special ,inspector ,general to conduct1 supervise1 and coordinate audits and investigations of the business activities of ,,aifa4 7#b7 ,other systems1 procedures1 and controls ,the ,special ,inspector ,general shall establish1 maintain1 and oversee such systems1 procedures1 and controls as the ,special ,inspector ,general considers appropriate to discharge the duty under paragraph 7#a74 7#c7 ,additional duties ,in addition to the duties specified in paragraphs 7#a7 and 7#b71 the ,inspector ,general shall also have the duties and responsibilities of inspectors general under the ,inspector ,general ,act of #aigh4 7e7 ,powers and authorities 7#a7 ,in general ,in carrying out the duties specified in subsection 7c71 the ,special ,inspector ,general shall have the authorities provided in section #f of the ,inspector ,general ,act of #aigh4 7#b7 ,additional authority ,the ,special ,inspector ,general shall carry out the duties specified in subsection 7c77#a7 in accordance with section #d7;b77#a7 of the ,inspector ,general ,act of #aigh4 7f7 ,personnel1 facilities1 and other resources 7#a7 ,additional officers 7,a7 ,the ,special ,inspector ,general may select1 appoint1 and employ such officers and employees as may be necessary for carrying out the duties of the ,special ,inspector ,general1 subject to the provisions of title #e1 ,united ,states ,code1 governing appointments in the competitive service1 and the provisions of chapter #ea and subchapter ,,iii of chapter #ec of such title1 relating to classification and ,general ,schedule pay rates4 7,b7 ,the ,special ,inspector ,general may exercise the authorities of subsections 7b7 through 7i7 of section #cafa of title #e1 ,united ,states ,code 7without regard to subsection 7a7 of that section74 7#b7 ,retention of services ,the ,special ,inspector ,general may obtain services as authorized by section #caji of title #e1 ,united ,states ,code1 at daily rates not to exceed the equivalent rate prescribed for grade ,,gs-#ae of the ,general ,schedule by section #eccb of such title4 7#c7 ,ability to contract for audits1 studies1 and other services ,the ,special ,inspector ,general may enter into contracts and other arrangements for audits1 studies1 analyses1 and other services with public agencies and with private persons1 and make such payments as may be necessary to carry out the duties of the ,special ,inspector ,general4 7#d7 ,request for information 7,a7 ,in general ,upon request of the ,special ,inspector ,general for information or assistance from any department1 agency1 or other entity of the ,federal ,government1 the head of such entity shall1 insofar as is practicable and not in contravention of any existing law1 furnish such information or assistance to the ,special ,inspector ,general1 or an authorized designee4 7,b7 ,refusal to comply ,whenever information or assistance requested by the ,special ,inspector ,general is1 in the judgment of the ,special ,inspector ,general1 unreasonably refused or not provided1 the ,special ,inspector ,general shall report the circumstances to the ,secretary of the ,treasury1 without delay4 7g7 ,reports 7#a7 ,annual report ,not later than #a year after the confirmation of the ,special ,inspector ,general1 and every calendar year thereafter1 the ,special ,inspector ,general shall submit to the ,president a report summarizing the activities of the ,special ,inspector ,general during the previous #a-year period ending on the date of such report4 7#b7 ,public disclosures ,nothing in this subsection shall be construed to authorize the public disclosure of information that is-- 7,a7 specifically prohibited from disclosure by any other provision of law2 7,b7 specifically required by ,executive order to be protected from disclosure in the interest of national defense or national security or in the conduct of foreign affairs2 or 7,c7 a part of an ongoing criminal investigation4 #gga4 ,other personnel ,except as otherwise provided in the bylaws of ,,aifa1 the chief executive officer1 in consultation with the ,board of ,directors1 shall appoint1 remove1 and define the duties of such qualified personnel as are necessary to carry out the powers1 duties1 and purpose of ,,aifa1 other than senior management1 who shall be appointed in accordance with section #gfi4 #ggb4 ,compliance ,the provision of assistance by the ,board of ,directors pursuant to this part shall not be construed as superseding any provision of ,state law or regulation otherwise applicable to an infrastructure project4 ,c ,terms and limitations on direct loans and loan guarantees #ggc4 ,eligibility criteria for assistance from ,,aifa and terms and limitations of loans 7a7 ,in general ,any project whose use or purpose is private and for which no public benefit is created shall not be eligible for financial assistance from ,,aifa under this part4 ,financial assistance under this part shall only be made available if the applicant for such assistance has demonstrated to the satisfaction of the ,board of ,directors that the infrastructure project for which such assistance is being sought-- 7#a7 is not for the refinancing of an existing infrastructure project2 and 7#b7 meets-- 7,a7 any pertinent requirements set forth in this part2 7,b7 any criteria established by the ,board of ,directors or chief executive officer in accordance with this part2 and 7,c7 the definition of a transportation infrastructure project1 water infrastructure project1 or energy infrastructure project4 7b7 ,considerations ,the criteria established by the ,board of ,directors pursuant to this part shall provide adequate consideration of-- 7#a7 the economic1 financial1 technical1 environmental1 and public benefits and costs of each infrastructure project under consideration for financial assistance under this part1 prioritizing infrastructure projects that-- 7,a7 contribute to regional or national economic growth2 7,b7 offer value for money to taxpayers2 7,c7 demonstrate a clear and significant public benefit2 7,d7 lead to job creation2 and 7,e7 mitigate environmental concerns2 7#b7 the means by which development of the infrastructure project under consideration is being financed1 including-- 7,a7 the terms1 conditions1 and structure of the proposed financing2 7,b7 the credit worthiness and standing of the project sponsors1 providers of equity1 and cofinanciers2 7,c7 the financial assumptions and projections on which the infrastructure project is based2 and 7,d7 whether there is sufficient ,state or municipal political support for the successful completion of the infrastructure project2 7#c7 the likelihood that the provision of assistance by ,,aifa will cause such development to proceed more promptly and with lower costs than would be the case without such assistance2 7#d7 the extent to which the provision of assistance by ,,aifa maximizes the level of private investment in the infrastructure project or supports a public-private partnership1 while providing a significant public benefit2 7#e7 the extent to which the provision of assistance by ,,aifa can mobilize the participation of other financing partners in the infrastructure project2 7#f7 the technical and operational viability of the infrastructure project2 7#g7 the proportion of financial assistance from ,,aifa2 7#h7 the geographic location of the project in an effort to have geographic diversity of projects funded by ,,aifa2 7#i7 the size of the project and its impact on the resources of ,,aifa2 7#aj7 the infrastructure sector of the project1 in an effort to have projects from more than one sector funded by ,,aifa2 and 7#aa7 encourages use of innovative procurement1 asset management1 or financing to minimize the all-in-life-cycle cost1 and improve the cost-effectiveness of a project4 7c7 ,application 7#a7 ,in general ,any eligible entity seeking assistance from ,,aifa under this part for an eligible infrastructure project shall submit an application to ,,aifa at such time1 in such manner1 and containing such information as the ,board of ,directors or the chief executive officer may require4 7#b7 ,review of applications ,,aifa shall review applications for assistance under this part on an ongoing basis4 ,the chief executive officer1 working with the senior management1 shall prepare eligible infrastructure projects for review and approval by the ,board of ,directors4 7#c7 ,dedicated revenue sources ,the ,federal credit instrument shall be repayable1 in whole or in part1 from tolls1 user fees1 or other dedicated revenue sources that also secure the infrastructure project obligations4 7d7 ,eligible infrastructure project costs 7#a7 ,in general ,except as provided in paragraph 7#b71 to be eligible for assistance under this part1 an infrastructure project shall have project costs that are reasonably anticipated to equal or exceed #ajj1jjj1jjj4 7#b7 ,rural infrastructure projects ,to be eligible for assistance under this part a rural infrastructure project shall have project costs that are reasonably anticipated to equal or exceed #be1jjj1jjj4 7e7 ,loan eligibility and maximum amounts 7#a7 ,in general ,the amount of a direct loan or loan guarantee under this part shall not exceed the lesser of #ej percent of the reasonably anticipated eligible infrastructure project costs or1 if the direct loan or loan guarantee does not receive an investment grade rating1 the amount of the senior project obligations4 7#b7 ,maximum annual loan and loan guarantee volume ,the aggregate amount of direct loans and loan guarantees made by ,,aifa in any single fiscal year may not exceed-- 7,a7 during the first #b fiscal years of the operations of ,,aifa1 #aj1jjj1jjj1jjj2 7,b7 during fiscal years #c through #i of the operations of ,,aifa1 #bj1jjj1jjj1jjj2 or 7,c7 during any fiscal year thereafter1 #ej1jjj1jjj1jjj4 7f7 ,state and local permits required ,the provision of assistance by the ,board of ,directors pursuant to this part shall not be deemed to relieve any recipient of such assistance1 or the related infrastructure project1 of any obligation to obtain required ,state and local permits and approvals4 #ggd4 ,loan terms and repayment 7a7 ,in general ,a direct loan or loan guarantee under this part with respect to an eligible infrastructure project shall be on such terms1 subject to such conditions1 and contain such covenants1 representations1 warranties1 and requirements 7including requirements for audits7 as the chief executive officer determines appropriate4 7b7 ,terms ,a direct loan or loan guarantee under this part-- 7#a7 shall-- 7,a7 be payable1 in whole or in part1 from tolls1 user fees1 or other dedicated revenue sources that also secure the senior project obligations 7such as availability payments and dedicated ,state or local revenues72 and 7,b7 include a rate covenant1 coverage requirement1 or similar security feature supporting the project obligations2 and 7#b7 may have a lien on revenues described in paragraph 7#a71 subject to any lien securing project obligations4 7c7 ,base interest rate ,the base interest rate on a direct loan under this part shall be not less than the yield on ,united ,states ,treasury obligations of a similar maturity to the maturity of the direct loan4 7d7 ,risk assessment ,before entering into an agreement for assistance under this part1 the chief executive officer1 in consultation with the ,director of the ,office of ,management and ,budget and considering rating agency preliminary or final rating opinion letters of the project under this section1 shall estimate an appropriate ,federal credit subsidy amount for each direct loan and loan guarantee1 taking into account such letter1 as well as any comparable market rates available for such a loan or loan guarantee1 should any exist4 ,the final credit subsidy cost for each loan and loan guarantee shall be determined consistent with the ,federal ,credit ,reform ,act1 #b ,u4,s4,c4 #ffa;a et seq4 7e7 ,credit fee ,with respect to each agreement for assistance under this part1 the chief executive officer may charge a credit fee to the recipient of such assistance to pay for1 over time1 all or a portion of the ,federal credit subsidy determined under subsection 7d71 with the remainder paid by the account established for ,,aifa2 provided1 that the source of fees paid under this section shall not be a loan or debt obligation guaranteed by the ,federal ,government4 ,in the case of a direct loan1 such credit fee shall be in addition to the base interest rate established under subsection 7c74 7f7 ,maturity date ,the final maturity date of a direct loan or loan guaranteed by ,,aifa under this part shall be not later than #ce years after the date of substantial completion of the infrastructure project1 as determined by the chief executive officer4 7g7 ,rating opinion letter 7#a7 ,in general ,the chief executive officer shall require each applicant for assistance under this part to provide a rating opinion letter from at least #a ratings agency1 indicating that the senior obligations of the infrastructure project1 which may be the ,federal credit instrument1 have the potential to achieve an investment-grade rating4 7#b7 ,rural infrastructure projects ,with respect to a rural infrastructure project1 a rating agency opinion letter described in paragraph 7#a7 shall not be required1 except that the loan or loan guarantee shall receive an internal rating score1 using methods similar to the ratings agencies generated by ,,aifa1 measuring the proposed direct loan or loan guarantee against comparable direct loans or loan guarantees of similar credit quality in a similar sector4 7h7 ,investment-,grade rating requirement 7#a7 ,loans and loan guarantees ,the execution of a direct loan or loan guarantee under this part shall be contingent on the senior obligations of the infrastructure project receiving an investment-grade rating4 7#b7 ,rating of aifa overall portfolio ,the average rating of the overall portfolio of ,,aifa shall be not less than investment grade after #e years of operation4 7i7 ,terms and repayment of direct loans 7#a7 ,schedule ,the chief executive officer shall establish a repayment schedule for each direct loan under this part1 based on the projected cash flow from infrastructure project revenues and other repayment sources4 7#b7 ,commencement ,scheduled loan repayments of principal or interest on a direct loan under this part shall commence not later than #e years after the date of substantial completion of the infrastructure project1 as determined by the chief executive officer of ,,aifa4 7#c7 ,deferred payments of direct loans 7,a7 ,authorization ,if1 at any time after the date of substantial completion of an infrastructure project assisted under this part1 the infrastructure project is unable to generate sufficient revenues to pay the scheduled loan repayments of principal and interest on the direct loan under this part1 the chief executive officer may allow the obligor to add unpaid principal and interest to the outstanding balance of the direct loan1 if the result would benefit the taxpayer4 7,b7 ,interest ,any payment deferred under subparagraph 7,a7 shall-- 7i7 continue to accrue interest1 in accordance with the terms of the obligation1 until fully repaid2 and 7ii7 be scheduled to be amortized over the remaining term of the loan4 7,c7 ,criteria 7i7 ,in general ,any payment deferral under subparagraph 7,a7 shall be contingent on the infrastructure project meeting criteria established by the ,board of ,directors4 7ii7 ,repayment standards ,the criteria established under clause 7i7 shall include standards for reasonable assurance of repayment4 7#d7 ,prepayment of direct loans 7,a7 ,use of excess revenues ,any excess revenues that remain after satisfying scheduled debt service requirements on the infrastructure project obligations and direct loan and all deposit requirements under the terms of any trust agreement1 bond resolution1 or similar agreement securing project obligations under this part may be applied annually to prepay the direct loan1 without penalty4 7,b7 ,use of proceeds of refinancing ,a direct loan under this part may be prepaid at any time1 without penalty1 from the proceeds of refinancing from non-,federal funding sources4 7#e7 ,sale of direct loans 7,a7 ,in general ,as soon as is practicable after substantial completion of an infrastructure project assisted under this part1 and after notifying the obligor1 the chief executive officer may sell to another entity1 or reoffer into the capital markets1 a direct loan for the infrastructure project1 if the chief executive officer determines that the sale or reoffering can be made on favorable terms for the taxpayer4 7,b7 ,consent of obligor ,in making a sale or reoffering under subparagraph 7,a71 the chief executive officer may not change the original terms and conditions of the direct loan1 without the written consent of the obligor4 7j7 ,loan guarantees 7#a7 ,terms ,the terms of a loan guaranteed by ,,aifa under this part shall be consistent with the terms set forth in this section for a direct loan1 except that the rate on the guaranteed loan and any payment1 pre-payment1 or refinancing features shall be negotiated between the obligor and the lender1 with the consent of the chief executive officer4 7#b7 ,guaranteed lender ,a guaranteed lender shall be limited to those lenders meeting the definition of that term in section #fja7;a7 of title #bc1 ,united ,states ,code4 7k7 ,compliance with ,,fcra2 in general ,direct loans and loan guarantees authorized by this part shall be subject to the provisions of the ,federal ,credit ,reform ,act of #aiij 7#b ,u4,s4,c4 #ffa et seq471 as amended4 #gge4 ,compliance and enforcement 7a7 ,credit agreement ,notwithstanding any other provision of law1 each eligible entity that receives assistance under this part from ,,aifa shall enter into a credit agreement that requires such entity to comply with all applicable policies and procedures of ,,aifa1 in addition to all other provisions of the loan agreement4 7b7 ,,aifa authority on noncompliance ,in any case in which a recipient of assistance under this part is materially out of compliance with the loan agreement1 or any applicable policy or procedure of ,,aifa1 the ,board of ,directors may take action to cancel unutilized loan amounts1 or to accelerate the repayment terms of any outstanding obligation4 7c7 ,nothing in this part is intended to affect existing provisions of law applicable to the planning1 development1 construction1 or operation of projects funded under the ,act4 #ggf4 ,audits2 reports to the ,president and ,congress 7a7 ,accounting ,the books of account of ,,aifa shall be maintained in accordance with generally accepted accounting principles1 and shall be subject to an annual audit by independent public accountants of nationally recognized standing appointed by the ,board of ,directors4 7b7 ,reports 7#a7 ,board of directors ,not later than #ij days after the last day of each fiscal year1 the ,board of ,directors shall submit to the ,president and ,congress a complete and detailed report with respect to the preceding fiscal year1 setting forth-- 7,a7 a summary of the operations of ,,aifa1 for such fiscal year2 7,b7 a schedule of the obligations of ,,aifa and capital securities outstanding at the end of such fiscal year1 with a statement of the amounts issued and redeemed or paid during such fiscal year2 7,c7 the status of infrastructure projects receiving funding or other assistance pursuant to this part during such fiscal year1 including all nonperforming loans1 and including disclosure of all entities with a development1 ownership1 or operational interest in such infrastructure projects2 7,d7 a description of the successes and challenges encountered in lending to rural communities1 including the role of the ,center for ,excellence and the ,office of ,rural ,assistance established under this part2 and 7,e7 an assessment of the risks of the portfolio of ,,aifa1 prepared by an independent source4 7#b7 ,,gao ,not later than #e years after the date of enactment of this part1 the ,comptroller ,general of the ,united ,states shall conduct an evaluation of1 and shall submit to ,congress a report on1 activities of ,,aifa for the fiscal years covered by the report that includes an assessment of the impact and benefits of each funded infrastructure project1 including a review of how effectively each such infrastructure project accomplished the goals prioritized by the infrastructure project criteria of ,,aifa4 7c7 ,books and records 7#a7 ,in general ,,aifa shall maintain adequate books and records to support the financial transactions of ,,aifa1 with a description of financial transactions and infrastructure projects receiving funding1 and the amount of funding for each such project maintained on a publically accessible database4 7#b7 ,audits by the ,secretary and ,,gao ,the books and records of ,,aifa shall at all times be open to inspection by the ,secretary of the ,treasury1 the ,special ,inspector ,general1 and the ,comptroller ,general of the ,united ,states4 ,d ,funding of ,,aifa #ggg4 ,administrative fees 7a7 ,in general ,in addition to fees that may be collected under section #ggd7;e71 the chief executive officer shall establish and collect fees from eligible funding recipients with respect to loans and loan guarantees under this part that-- 7#a7 are sufficient to cover all or a portion of the administrative costs to the ,federal ,government for the operations of ,,aifa1 including the costs of expert firms1 including counsel in the field of municipal and project finance1 and financial advisors to assist with underwriting1 credit analysis1 or other independent reviews1 as appropriate2 7#b7 may be in the form of an application or transaction fee1 or other form established by the ,,ceo2 and 7#c7 may be based on the risk premium associated with the loan or loan guarantee1 taking into consideration-- 7,a7 the price of ,united ,states ,treasury obligations of a similar maturity2 7,b7 prevailing market conditions2 7,c7 the ability of the infrastructure project to support the loan or loan guarantee2 and 7,d7 the total amount of the loan or loan guarantee4 7b7 ,availability of amounts ,amounts collected under subsections 7a77#a71 7a77#b71 and 7a77#c7 shall be available without further action2 provided further1 that the source of fees paid under this section shall not be a loan or debt obligation guaranteed by the ,federal ,government4 #ggh4 ,efficiency of ,,aifa ,the chief executive officer shall1 to the extent possible1 take actions consistent with this part to minimize the risk and cost to the taxpayer of ,,aifa activities4 ,fees and premiums for loan guarantee or insurance coverage will be set at levels that minimize administrative and ,federal credit subsidy costs to the ,government1 as defined in ,section #ejb of the ,federal ,credit ,reform ,act of #aiij1 as amended1 of such coverage1 while supporting achievement of the program's objectives1 consistent with policies as set forth in the ,business ,plan4 #ggi4 ,funding ,there is hereby appropriated to ,,aifa to carry out this part1 for the cost of direct loans and loan guarantees subject to the limitations under section #ggc1 and for administrative costs1 #aj1jjj1jjj1jjj1 to remain available until expended2 provided1 that such costs1 including the costs of modifying such loans1 shall be as defined in section #ejb of the ,federal ,credit ,reform ,act of #aiij1 as amended2 provided further1 that of this amount1 not more than #be1jjj1jjj for each of fiscal years #bjac through #bjad1 and not more than #ej1jjj1jjj for fiscal year #bjae may be used for administrative costs of ,,aifa2 provided further1 that not more than #e percent of such amount shall be used to offset subsidy costs associated with rural projects4 ,amounts authorized shall be available without further action4 ,e ,extension of exemption from alternative minimum tax treatment for certain tax-,exempt bonds #ghj4 ,extension of exemption from alternative minimum tax treatment for certain tax-exempt bonds 7a7 ,in general ,clause 7vi7 of section #eg7;a77#e77;,c7 of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by striking ,january #a1 #bjaa in subclause 7,i7 and inserting ,january #a1 #bjad2 and 7#b7 by striking and #bjaj in the heading and inserting 1 #bjaj1 #bjaa1 #bjab and #bjac4 7b7 ,adjusted current earnings ,clause 7iv7 of section #ef7;g77#d77;,b7 of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by striking ,january #a1 #bjaa in subclause 7,i7 and inserting ,january #a1 #bjad2 and 7#b7 by striking ,,and #bjaj in the heading and inserting 1 #bjaj1 #bjaa1 #bjab and #bjac4 7c7 ,effective date ,the amendments made by this section shall apply to obligations issued after ,december #ca1 #bjaj4