To empower States with authority for most taxing and spending for highway programs and mass transit programs, and for other purposes.

May 11, 2005

Mr. FLAKE introduced the following bill; which was referred to the Committee on Transportation and Infrastructure, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To empower States with authority for most taxing and spending for highway programs and mass transit programs, and for other purposes.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Transportation Empowerment Act'.

SEC. 2. FINDINGS AND PURPOSES.

(a) FINDINGS- Congress finds that--

(1) the objective of the Federal highway program has been to facilitate the construction of a modern freeway system that promotes efficient interstate commerce by connecting all States;

(2) that objective has been attained, and the Interstate System connecting all States is near completion;

(3) today, surface transportation problems are increasingly local and regional;

(4) each State, not a central bureaucracy, can better fulfill the responsibility of providing an efficient transportation network for the residents of the State;

(5) each State has the means to build and operate a network of transportation systems, including highways, that best serves the needs of the State;

(6) each State is best capable of determining the needs of the State and acting on those needs;

(7) the Federal role in highway transportation has, over time, usurped the role of the States by taxing fuels used in the States and then distributing the proceeds to the States based on the Federal Government's perceptions of what is best for the States;

(8) the Federal Government has used the Federal gasoline tax revenues to force all States to take actions that are not necessarily appropriate for individual States;

(9) the Federal distribution, review, and enforcement process wastes billions of dollars on unproductive activities;

(10) the Federal distribution is inequitable and biased against certain regions;

(11) Federal mandates that apply uniformly to all 50 States, regardless of the different circumstances of the States, cause the States to waste billions of hard-earned tax dollars on projects, programs, and activities that the States would not otherwise undertake; and

(12) Congress has expressed a strong interest in reducing the role of the Federal Government by allowing each State to manage its own affairs.

(b) PURPOSES- The purposes of this Act are--

(1) to return to the individual States maximum discretionary authority and fiscal responsibility for all elements of the national surface transportation systems that are not within the direct purview of the Federal Government;

(2) to preserve Federal responsibility for the Dwight D. Eisenhower National System of Interstate and Defense Highways;

(3) to preserve the responsibility of the Department of Transportation for--

(A) design, construction, and preservation of transportation facilities on Federal public land;

(B) national programs of transportation safety research and development; and

(C) emergency assistance to the States in response to natural disasters;

(4) to eliminate to the maximum extent practicable Federal obstacles to the ability of each State to apply innovative solutions to the financing, design, construction, operation, and preservation of Federal and State transportation facilities; and

(5) with respect to transportation activities carried out by States, local governments, and the private sector, to encourage--

(A) competition among States, local governments, and the private sector; and

(B) innovation, energy efficiency, private sector participation, and productivity.

SEC. 3. CONTINUATION OF FUNDING FOR ESSENTIAL HIGHWAY PROGRAMS.

(a) IN GENERAL-

(1) FUNDING- For the purpose of carrying out title 23, United States Code, the following sums are authorized to be appropriated out of the Highway Trust Fund:

(A) INTERSTATE MAINTENANCE PROGRAM- For the Interstate maintenance program under section 119 of title 23, United States Code, $5,600,000,000 for fiscal year 2006, $5,700,000,000 for fiscal year 2007, $5,800,000,000 for fiscal year 2008, $5,900,000,000 for fiscal year 2009, $6,000,000,000 for fiscal year 2010, and $6,100,000,000 for fiscal year 2011.

(B) INTERSTATE AND INDIAN RESERVATION BRIDGE PROGRAM- For the Interstate and Indian reservation bridge program under section 144 of that title $1,500,000,000 for fiscal year 2006, $1,600,000,000 for fiscal year 2007, $1,700,000,000 for fiscal year 2008, $1,800,000,000 for fiscal year 2009, $1,900,000,000 for fiscal year 2010, and $2,000,000,000 for fiscal year 2011.

(C) FEDERAL LANDS HIGHWAYS PROGRAM-

(i) INDIAN RESERVATION ROADS- For Indian reservation roads under section 204 of that title $300,000,000 for each of fiscal years 2006 through 2011.

(ii) PUBLIC LANDS HIGHWAYS- For public lands highways under section 204 of that title $275,000,000 for each of fiscal years 2006 through 2011.

(iii) PARKWAYS AND PARK ROADS- For parkways and park roads under section 204 of that title $200,000,000 for each of fiscal years 2006 through 2011.

(D) HIGHWAY SAFETY PROGRAMS-

(i) IN GENERAL- For highway safety programs under section 402 of that title $170,000,000 for each of fiscal years 2006 through 2011.

(ii) HIGHWAY SAFETY RESEARCH AND DEVELOPMENT- For highway safety research and development under section 403 of that title $30,000,000 for each of fiscal years 2006 through 2011.

(E) TRANSPORTATION RESEARCH PROGRAMS-

(i) SURFACE TRANSPORTATION RESEARCH- For cooperative agreements with nonprofit research organizations to carry out research under section 502 of that title $150,000,000 for each of fiscal years 2006 through 2011.

(ii) ITS RESEARCH AND DEVELOPMENT- For carrying out section 5207 of the Transportation Equity Act for the 21st Century (23 U.S.C. 502 note; 112 Stat. 457) $220,000,000 for each of fiscal years 2006 through 2011, of which--

(I) $110,000,000 for each fiscal year shall be made available for research; and

(II) $110,000,000 for each fiscal year shall be made available for development and operational tests.

(iii) UNIVERSITY TRANSPORTATION RESEARCH- For carrying out section 5505 of title 49, United States Code, $20,000,000 for each of fiscal years 2006 through 2011.

(2) TRANSFERABILITY OF FUNDS- Section 104 of title 23, United States Code, is amended by striking subsection (g) and inserting the following:

`(g) TRANSFERABILITY OF FUNDS-

`(1) IN GENERAL- To the extent that a State determines that funds made available under this title to the State for a purpose are in excess of the needs of the State for that purpose, the State may transfer the excess funds to, and use the excess funds for, any surface transportation (including mass transit and rail) purpose in the State.

`(2) ENFORCEMENT- If the Secretary determines that a State has transferred funds under paragraph (1) to a purpose that is not a surface transportation purpose as described in paragraph (1), the amount of the improperly transferred funds shall be deducted from any amount the State would otherwise receive from the Highway Trust Fund for the fiscal year that begins after the date of the determination.'.

(3) FEDERAL-AID SYSTEM- Section 103(a) of title 23, United States Code, is amended by striking `systems are the Interstate System and the National Highway System' and inserting `system is the Interstate System'.

(4) INTERSTATE MAINTENANCE PROGRAM- Section 104(b) of title 23, United States Code, is amended by striking paragraph (4) and inserting the following:

`(4) INTERSTATE MAINTENANCE COMPONENT- For each of fiscal years 2005 through 2010, for the Interstate maintenance program under section 119, 1 percent to the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands and the remaining 99 percent apportioned as follows:

`(A)(i) For each State with an average population density of 20 persons or fewer per square mile, and each State with a population of 1,500,000 persons or fewer and with a land area of 10,000 square miles or less, the greater of--

`(I) a percentage share of apportionments equal to the percentage listed for the State in clause (ii); or

`(II) a share determined under subparagraph (B).

`(ii) The percentage referred to in clause (i)(I) is as follows:

`States:

--Percentage:

Alabama

--2.0269

Alaska

--1.1915

Arizona

--1.5581

Arkansas

--1.3214

California

--9.1962

Colorado

--1.1673

Connecticut

--1.5186

Delaware

--0.4424

District of Columbia

--0.3956

Florida

--4.6176

Georgia

--3.5104

Hawaii

--0.5177

Idaho

--0.7718

Illinois

--3.3819

Indiana

--2.3588

Iowa

--1.2020

Kansas

--1.1717

Kentucky

--1.7365

Louisiana

--1.5900

Maine

--0.5263

Maryland

--1.5087

Massachusetts

--1.8638

Michigan

--3.1535

Minnesota

--1.4993

Mississippi

--1.2186

Missouri

--2.3615

Montana

--0.9929

Nebraska

--0.7768

Nevada

--0.7248

New Hampshire

--0.5163

New Jersey

--2.5816

New Mexico

--0.9884

New York

--5.1628

North Carolina

--2.8298

North Dakota

--0.6553

Ohio

--3.4257

Oklahoma

--1.5419

Oregon

--1.2183

Pennsylvania

--4.9887

Puerto Rico

--0.5000

Rhode Island

--0.5958

South Carolina

--1.5910

South Dakota

--0.7149

Tennessee

--2.2646

Texas

--7.2131

Utah

--0.7831

Vermont

--0.4573

Virginia

--2.5627

Washington

--1.7875

West Virginia

--1.1319

Wisconsin

--1.9916

Wyoming

--0.6951.

`(B) For each State not described in subparagraph (A), a share of the apportionments remaining determined in accordance with the following formula:

`(i) 1/9 in the ratio that the total rural lane miles in each State bears to the total rural lane miles in all States with an average population density greater than 20 persons per square mile and all States with a population of more than 1,500,000 persons and with a land area of more than 10,000 square miles.

`(ii) 1/9 in the ratio that the total rural vehicle miles traveled in each State bears to the total rural vehicle miles traveled in all States described in clause (i).

`(iii) 2/9 in the ratio that the total urban lane miles in each State bears to the total urban lane miles in all States described in clause (i).

`(iv) 2/9 in the ratio that the total urban vehicle miles traveled in each State bears to the total urban vehicle miles traveled in all States described in clause (i).

`(v) 3/9 in the ratio that the total diesel fuel used in each State bears to the total diesel fuel used in all States described in clause (i).'.

(5) INTERSTATE BRIDGE PROGRAM- Section 144 of title 23, United States Code, is amended--

(A) in subsection (d)--

(i) by inserting `on the Federal-aid system or described in subsection (c)(3)' after `highway bridge' each place it appears; and

(ii) by inserting `on the Federal-aid system or described in subsection (c)(3)' after `highway bridges' each place it appears;

(B) in the second sentence of subsection (e)--

(i) in paragraph (1), by adding `and' at the end;

(ii) in paragraph (2), by striking the comma at the end and inserting a period; and

(iii) by striking paragraphs (3) and (4);

(C) in the first sentence of subsection (l), by inserting `on the Federal-aid system or described in subsection (c)(3)' after `any bridge';

(D) in subsection (m)(1), by inserting `on the Federal-aid system or described in subsection (c)(3)' after `construct any bridge'; and

(E) in the first sentence of subsection (n), by inserting `for each of fiscal years 2006 through 2011,' after `of law,'.

(6) NATIONAL DEFENSE HIGHWAYS- Section 311 of title 23, United States Code, is amended--

(A) in the first sentence, by striking `under subsection (a) of section 104 of this title' and inserting `to carry out this section'; and

(B) by striking the second sentence.

(7) MOTOR CARRIER SAFETY GRANTS- Section 31104(a) of title 49, United States Code, is amended by adding at the end the following:

`(6) Not more than $110,000,000 for each of fiscal years 2005 through 2010.'.

(b) EXPENDITURES FROM HIGHWAY TRUST FUND-

(1) EXPENDITURES FOR ESSENTIAL PROGRAMS- Section 9503(c) of the Internal Revenue Code of 1986 (relating to expenditures from Highway Trust Fund) is amended--

(A) in paragraph (1), by striking `June 1, 2005' and inserting `October 1, 2011';

(B) in paragraphs (2)(A)(i)(III), (2)(A)(ii), (4)(A)(i), and (5)(A), by striking `October 1, 2005' and inserting `October 1, 2011';

(C) in paragraph (1)--

(i) in subparagraph (J), by striking `or' at the end;

(ii) in subparagraph (K), by striking the period and inserting `, or';

(iii) by inserting after subparagraph (K) the following:

`(L) authorized to be paid out of the Highway Trust Fund under the Transportation Empowerment Act.'; and

(iv) by striking the last sentence and inserting the following new flush sentence:

`In determining the authorizations under the Acts referred to in the preceding subparagraphs, such Acts shall be applied as in effect on the date of enactment of the Transportation Empowerment Act.'; and

(D) in paragraphs (2)(A)(i) and (3), by striking `July 1, 2006' each place it appears and inserting `July 1, 2011'.

(2) AMOUNTS AVAILABLE FOR ESSENTIAL PROGRAM EXPENDITURES- Section 9503 of such Code (relating to the Highway Trust Fund) is amended by adding at the end the following:

`(g) ESSENTIAL PROGRAMS FINANCING RATE- For purposes of this section--

`(1) IN GENERAL- Except as provided in paragraph (2), in the case of gasoline, special motor fuels, kerosene, and diesel fuel, the essential programs financing rate is--

`(A) after September 30, 2005, and before October 1, 2006, so much of the rate of the taxes described in subparagraphs (A) and (D) of subsection (b)(1) transferred to the Highway Trust Fund as does not exceed 16.3 cents per gallon,

`(B) after September 30, 2006, and before October 1, 2007, so much of the rate of such taxes as does not exceed 11.3 cents per gallon,

`(C) after September 30, 2007, and before October 1, 2008, so much of the rate of such taxes as does not exceed 8.3 cents per gallon,

`(D) after September 30, 2008, and before October 1, 2009, so much of the rate of such taxes as does not exceed 7.3 cents per gallon, and

`(E) after September 30, 2009, the rate of such taxes.

`(2) APPLICATION OF RATE- In the case of fuels used as described in paragraph (4)(D) and (5)(B) of subsection (c), the essential programs financing rate is zero.'.

(c) TERMINATION OF TRANSFERS TO MASS TRANSIT ACCOUNT-

(1) IN GENERAL- Section 9503(e)(2) of the Internal Revenue Code of 1986 (relating to Mass Transit Account) is amended by adding at the end the following new flush sentence:

No transfers shall be made under this paragraph after September 30, 2005.

(2) AUTHORIZATION TO EXPEND REMAINING BALANCES IN ACCOUNT- Section 9503(e)(3) of such Code is amended by striking `before June 1, 2005'.

(d) EFFECTIVE DATE- The amendments made by this section take effect on October 1, 2005.

SEC. 4. INFRASTRUCTURE SPECIAL ASSISTANCE FUND.

(a) BALANCE OF ESSENTIAL PROGRAMS FINANCING RATE DEPOSITED IN FUND- Section 9503 of the Internal Revenue Code of 1986 (as amended by section 3(b)(2)) is amended by adding at the end the following:

`(h) ESTABLISHMENT OF INFRASTRUCTURE SPECIAL ASSISTANCE FUND-

`(1) CREATION OF FUND- There is established in the Highway Trust Fund a separate fund to be known as the `Infrastructure Special Assistance Fund' consisting of such amounts as may be transferred or credited to the Infrastructure Special Assistance Fund as provided in this subsection or section 9602(b).

`(2) TRANSFERS TO INFRASTRUCTURE SPECIAL ASSISTANCE FUND- On the first day of each fiscal year, the Secretary, in consultation with the Secretary of Transportation, shall determine the excess (if any) of--

`(A) the sum of--

`(i) the amounts appropriated in such fiscal year to the Highway Trust Fund under subsection (b) which are attributable to the essential programs financing rate for such year, plus

`(ii) the amounts appropriated in such fiscal year to the Highway Trust Fund under subsection (b) which are attributable to taxes under sections 4051, 4061, 4071, and 4481 for such year, over

`(B) the amount appropriated under subsection (c) for such fiscal year,

and shall transfer such excess to the Infrastructure Special Assistance Fund.

`(3) EXPENDITURES FROM INFRASTRUCTURE SPECIAL ASSISTANCE FUND-

`(A) TRANSITIONAL ASSISTANCE-

`(i) IN GENERAL- Except as provided in clause (iv), during fiscal years 2006 through 2009, $1,000,000,000 in the Infrastructure Special Assistance Fund shall be available to States for transportation-related program expenditures.

`(ii) STATE SHARE-

`(I) IN GENERAL- Except as provided in clause (v), each State is entitled to a share of the amount specified in clause (i) upon enactment of legislation providing 1 of the 2 funding mechanisms described in clause (iii).

`(II) DETERMINATION OF STATE SHARE- For purposes of subclause (I), each State's share shall be determined in the following manner:

`(aa) Multiply the percentage of the amounts appropriated in the latest fiscal year for which such data are available to the Highway Trust Fund under subsection (b) which is attributable to taxes paid by highway users in the State, by the amount specified in clause (i). If the result does not exceed $15,000,000, the State's share equals $15,000,000. If the result exceeds $15,000,000, the State's share is determined under item (bb).

`(bb) Multiply the percentage determined under item (aa), by the amount specified in clause (i) reduced by an amount equal to $15,000,000 times the number of States the share of which is determined under item (aa).

`(iii) LEGISLATIVE FUNDING MECHANISMS- A funding mechanism is described in this clause as follows:

`(I) A funding mechanism which results in revenues for transportation-related projects in the State for fiscal year 2010 and each succeeding fiscal year which are equal to the excess of--

`(aa) the mean annual average of distributions from the Highway Trust Fund to the State for fiscal years 2000 through 2005; over

`(bb) the distributions from the Highway Trust Fund to the State for such fiscal year attributable to the essential programs financing rate for such year.

`(II) A funding mechanism which results in an increase in the State rate of tax on motor fuels equal to the decrease in the rate of tax on such fuels under section 4081 for fiscal year 2010 and any succeeding fiscal year.

`(iv) DISTRIBUTION OF REMAINING AMOUNT- If after September 30, 2009, a portion of the amount specified in clause (i) remains, the Secretary, in consultation with the Secretary of Transportation, shall, on October 1, 2009, apportion the portion among the States which received a share of such amount under clause (ii) and which are not described in clause (v) using the percentages determined under clause (ii)(II)(aa) for such States.

`(v) ENFORCEMENT OF FUNDING MECHANISM REQUIREMENT- If a State, which enacted legislation providing for a funding mechanism described in clause (iii), terminates such mechanism before fiscal year 2009, the State's share determined under clauses (ii) and (iv) shall be deducted from any amount the State would otherwise receive from the Highway Trust Fund for fiscal year 2009.

`(B) ADDITIONAL EXPENDITURES FROM FUND-

`(i) IN GENERAL- Amounts in the Infrastructure Special Assistance Fund, in excess of the amount specified in subparagraph (A)(i), shall be available, as provided by appropriation Acts, to the States for any surface transportation (including mass transit and rail) purpose in such States, and the Secretary shall apportion such excess amounts among all States using the percentages determined under clause (ii)(II)(aa) for such States.

`(ii) ENFORCEMENT- If the Secretary determines that a State has used amounts under clause (i) for a purpose which is not a surface transportation purpose as described in clause (i), the improperly used amounts shall be deducted from any amount the State would otherwise receive from the Highway Trust Fund for the fiscal year which begins after the date of the determination.'.

(b) EFFECTIVE DATE- The amendment made by this section takes effect on October 1, 2005.

SEC. 5. RETURN OF EXCESS TAX RECEIPTS TO STATES.

(a) IN GENERAL- Section 9503(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following:

`(6) RETURN OF EXCESS TAX RECEIPTS TO STATES FOR SURFACE TRANSPORTATION PURPOSES-

`(A) IN GENERAL- On the first day of each of fiscal years 2006, 2007, 2008, and 2009, the Secretary, in consultation with the Secretary of Transportation, shall--

`(i) determine the excess (if any) of--

`(I) the amounts appropriated in such fiscal year to the Highway Trust Fund under subsection (b) which are equivalent to the taxes attributable to the excess of--

`(aa) the Highway Trust Fund financing rate for such year, over

`(bb) the essential programs financing rate for such year, over

`(II) the amounts so appropriated which are equivalent to the taxes described in paragraphs (4)(D) and (5)(B), and

`(ii) allocate the amount determined under clause (i) among the States (as defined in section 101(a) of title 23, United States Code) for surface transportation (including mass transit and rail) purposes so that--

`(I) the percentage of that amount allocated to each State, is equal to

`(II) the percentage of the amount determined under clause (i)(I) paid into the Highway Trust Fund in the latest fiscal year for which such data are available which is attributable to highway users in the State.

`(B) ENFORCEMENT- If the Secretary determines that a State has used amounts under subparagraph (A) for a purpose which is not a surface transportation purpose as described in subparagraph (A), the improperly used amounts shall be deducted from any amount the State would otherwise receive from the Highway Trust Fund for the fiscal year which begins after the date of the determination.'.

(b) EFFECTIVE DATE- The amendment made by this section takes effect on October 1, 2005.

SEC. 6. FEDERAL-AID FACILITY PRIVATIZATION.

(a) DEFINITIONS- In this section--

(1) EXECUTIVE AGENCY- The term `Executive agency' has the meaning provided in section 105 of title 5, United States Code.

(2) PRIVATIZATION- The term `privatization' means the disposition or transfer of a transportation infrastructure asset, whether by sale, lease, or similar arrangement, from a Federal, State, or local government to a private party.

(3) STATE OR LOCAL GOVERNMENT- The term `State or local government' means the government of--

(A) any State;

(B) the District of Columbia;

(C) any commonwealth, territory, or possession of the United States;

(D) any county, municipality, city, town, township, local public authority, school district, special district, intrastate district, regional or interstate government entity, council of governments, or agency or instrumentality of a local government; or

(E) any federally recognized Indian tribe.

(4) TRANSPORTATION INFRASTRUCTURE ASSET-

(A) IN GENERAL- The term `transportation infrastructure asset' means any surface-transportation-related asset financed in whole or in part by the Federal Government, including a road, tunnel, bridge, or mass-transit-related or rail-related asset.

(B) EXCLUSION- The term does not include any transportation-related asset on the Interstate System (as defined in section 101 of title 23, United States Code).

(b) PRIVATIZATION INITIATIVES BY STATE AND LOCAL GOVERNMENTS- The head of each Executive agency shall--

(1) assist State and local governments in efforts to privatize the transportation infrastructure assets of the State and local governments; and

(2) subject to subsection (a), approve requests from State and local governments to privatize transportation infrastructure assets and waive or modify any condition relating to the original Federal program that funded the asset.

(c) CRITERIA- The head of an Executive agency shall approve a request described in subsection (b)(2) if--

(1) the State or local government demonstrates that a market mechanism, legally enforceable agreement, or regulatory mechanism will ensure that the transportation infrastructure asset will continue to be used for the general objectives of the original Federal program that funded the asset (which shall not be considered to include every condition required for the recipient of Federal funds to have obtained the original Federal funds), so long as needed for those objectives; and

(2) the private party purchasing or leasing the transportation infrastructure asset agrees to comply with all applicable conditions of the original Federal program.

(d) LACK OF OBLIGATION TO REPAY FEDERAL FUNDS- A State or local government shall have no obligation to repay to any agency of the Federal Government any Federal funds received by the State or local government in connection with a transportation infrastructure asset that is privatized under this section.

(e) USE OF PROCEEDS-

(1) IN GENERAL- Subject to paragraph (2), a State or local government may use proceeds from the privatization of a transportation infrastructure asset to the extent permitted under applicable conditions of the original Federal program.

(2) RECOVER OF CERTAIN COSTS- Notwithstanding any other provision of law, the State or local government shall be permitted to recover from the privatization of a transportation infrastructure asset--

(A) the capital investment in the transportation infrastructure asset made by the State or local government;

(B) an amount equal to the unreimbursed operating expenses in the transportation infrastructure asset paid by the State or local government; and

(C) a reasonable rate of return on the investment made under subparagraph (A) and expenses paid under subparagraph (B).

SEC. 7. REDUCTION IN TAXES ON GASOLINE, DIESEL FUEL, KEROSENE, AND SPECIAL FUELS FUNDING HIGHWAY TRUST FUND.

(a) REDUCTION IN TAX RATE-

(1) IN GENERAL- Section 4081(a)(2)(A) of the Internal Revenue Code of 1986 (relating to rates of tax) is amended--

(A) in clause (i), by striking `18.3 cents' and inserting `3 cents'; and

(B) in clause (iii), by striking `24.3 cents' and inserting `3 cents'.

(2) CONFORMING AMENDMENT- Section 6427(b)(2)(A) of such Code is amended by striking `7.4 cents' and inserting `2.9 cents'.

(b) ADDITIONAL CONFORMING AMENDMENTS-

(1) Section 4041(a)(1)(C)(iii)(I) of the Internal Revenue Code of 1986 is amended by striking `(4.3 cents per gallon after September 30, 2005)' and inserting `(zero after September 30, 2009)'.

(2) Section 4041(m)(1) of such Code is amended--

(A) in subparagraph (A), by striking `2005' and inserting `2009'; and

(B) by striking subparagraph (B) and inserting the following:

`(B) zero after September 30, 2009.'.

(3) Section 4081(d)(1) of such Code is amended by striking `4.3 cents per gallon after September 30, 2005' and inserting `zero after September 30, 2011'.

(4) Section 9503(b) of such Code is amended--

(A) in paragraphs (1) and (2), by striking `October 1, 2005' each place it appears and inserting `October 1, 2011';

(B) in the heading of paragraph (2), by striking `OCTOBER 1, 2005' and inserting `OCTOBER 1, 2011';

(C) in paragraph (2), by striking `after September 30, 2005, and before July 1, 2006' and inserting `after September 30, 2011, and before July 1, 2012'; and

(D) in paragraph (4), by striking `2005' each place it appears and inserting `2009'.

(c) FLOOR STOCK REFUNDS-

(1) IN GENERAL- If--

(A) before October 1, 2009, tax has been imposed under section 4081 of the Internal Revenue Code of 1986 on any liquid; and

(B) on such date such liquid is held by a dealer and has not been used and is intended for sale;

there shall be credited or refunded (without interest) to the person who paid such tax (in this subsection referred to as the `taxpayer') an amount equal to the excess of the tax paid by the taxpayer over the amount of such tax which would be imposed on such liquid had the taxable event occurred on such date.

(2) TIME FOR FILING CLAIMS- No credit or refund shall be allowed or made under this subsection unless--

(A) claim therefor is filed with the Secretary of the Treasury before April 1, 2010; and

(B) in any case where liquid is held by a dealer (other than the taxpayer) on October 1, 2009--

(i) the dealer submits a request for refund or credit to the taxpayer before January 1, 2010; and

(ii) the taxpayer has repaid or agreed to repay the amount so claimed to such dealer or has obtained the written consent of such dealer to the allowance of the credit or the making of the refund.

(3) EXCEPTION FOR FUEL HELD IN RETAIL STOCKS- No credit or refund shall be allowed under this subsection with respect to any liquid in retail stocks held at the place where intended to be sold at retail.

(4) DEFINITIONS- For purposes of this subsection, the terms `dealer' and `held by a dealer' have the respective meanings given to such terms by section 6412 of such Code; except that the term `dealer' includes a producer.

(5) CERTAIN RULES TO APPLY- Rules similar to the rules of subsections (b) and (c) of section 6412 and sections 6206 and 6675 of such Code shall apply for purposes of this subsection.

(d) EFFECTIVE DATE-

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to fuel removed after September 30, 2009.

(2) ADDITIONAL CONFORMING AMENDMENTS- The amendments made by subsection (b) take effect on October 1, 2005.

END