G/SCM/Q2/USA/66  
 
25 April 2016  
(16-2315)  Page: 1/4  
Committee on Subsidies and  
Countervailing Measures  Original: English  
 
SUBSIDIES 
REPLIES TO QUESTIONS POSED BY CANADA1 REGARDING THE  
NEW AND FULL NOTIFICATION OF THE UNITED STATES2 
The following communication, dated 25 April 2016, is being circulated at the request of the 
Delegation of the United States. 
 
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Question 1 
 2.2  Energy Conservation Programs – Transportation Sector 
 
Could the U.S. provide more information on who are the actual users of this program? 
 
Reply 
 
The names of all the actual users are not available and is not required under Article 25 of the Agreement on Subsidies and Countervailing Measures.  
 
Question 2  
2.7  Advanced Technology Vehicles Manufacturing Loan Program (ATVM) 
 Could the U.S. provide more information on the terms of the loan program, including 
interest rates and length of the loans available? 
 Reply 
 
Section 136 of the Energy Independence and Secu rity Act of 2007 (Pub L. 110-140) states that 
any loan provided shall have an interest rate that  is equal to the cost of funds to the Department 
of the Treasury for obligations of comparable maturity and shall have a term equal to the lesser of: 
(i) the projected life, in years, of the eligible proj ect to be carried out using funds from the loan (ii) 
25 years.  
Question 3 
 3.10  Advanced Energy Property Credit  
This program provides a 30% credit for inve stment in qualified property used in a 
qualified advanced energy manufacturing proj ect. Could the U.S. indicate whether there 
is a cap per project? 
 
Reply 
 
There is no statutory cap. The credit was issued in phases. The guidance applicable to Phase I did 
not provide for a cap per project. During Phase II (which reallocated about $150 million of forfeited 
                                               
1 G/SCM/Q2/USA/63. 
2 G/SCM/N/253/USA. G/SCM/Q2/USA/66 
 
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  Phase I credits) there was a cap per project of $30 million under the applicable guidance, 
Notice 2013-12.  Question 4 
 
11.1 Empowerment Zones  
Could the U.S. please provide more informat ion on the types of business activities and 
investments that are eligible under the Empowerment Zones assistance program? 
 Reply 
 There is some variation in the employment requir ements by incentive, but in general terms an 
enterprise zone business is a business located in a designated Empowerment Zone. The business 
must conduct its trade or business within the zone, have at least 50% of total gross income 
derived from the active conduct of business in the zone, have a substantial portion of tangible and intangible property in the zone, a substantial portion of services performed by its employees in the 
z o n e ,  a t  l e a s t  3 5 %  o f  e m p l o y e e s  t h a t  l i v e  i n  the zone, less than 5% of the average of the 
aggregate unadjusted bases of property attributable to unqualifying financial property. There are some limitations, such as on real property and tangible personal property rentals. Property eligible for expensing is depreciable tangible property.  
 
Question 5  
11.2 New Markets Tax Credits 
 This measure encourages capital investment  in businesses located in economically 
distressed areas. Could the U. S please explain how it defi nes "economically distressed 
area"?  Reply 
 New market tax credit "economically distressed areas" (essentially, low income communities) are defined in Section 45D as follows: 
 
(e)  Low-income community   
For purposes of this section: 
 
(1) In general  
 
The term "low-income community" means any population census tract if: 
 (A)  the poverty rate for such tract is at least 20%, or  
 
(B) (i)  in the case of a tract not located within a metropolitan area, the median 
family income for such tract does not exceed 80% of statewide median family 
income, or  
 
(ii)  in the case of a tract located within a metropolitan area, the median family income for such tract does not exceed 80% of the greater of statewide 
median family income or the metropo litan area median family income.  
 
Subparagraph (B) shall be applied using possession-wide median family income in the 
case of census tracts located within a possession of the United States.  
 
There are some exceptions for "targeted populations," areas not within census tracts, tracts with 
population less than 2000, and rural tracts with hi gh out-migration (for this last exception, the 
median income cut-off is raised to 85%).  G/SCM/Q2/USA/66 
 
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  Tennessee Valley Authority Econom ic Development Loan Fund 
 Could the U.S. provide the criteria required by those seeking access to the funds in this 
program? 
 
Reply 
 
TVA loan funds are used to promote economic expansion and job creation. The loan funds are 
primarily available to manufacturing firms and local non-profit economic development entities. Loans can be used to fund the construction of new manufacturing facilities, expansion of existing facilities, and development of publicly owned indu strial sites or buildings. TVA is dedicated to 
ensuring that all businesses have access to the resources they need and supports woman- and 
minority-owned business development and special opportunities (economically distressed) communities. 
 
Colorado - Aircraft Manufacturer Tax Credit  
Could the U.S. provide information on eligibility requirements? 
 Reply 
 
Aviation Development Zone (ADZ) eligible companies are businesses involved in: 
 - Production of aircraft parts specifically used in the manufacture of aircraft; 
- Proof of concept, prototyping, test and evaluation, certification or production of aircraft, 
- Maintenance and repair, completion, or modification of aircraft; - Unmanned Aerial Vehicles (UAVs) are considered aircrafts. 
  
An ADZ is any airport in Colorado that is a public-use facility designated by the Federal Aviation Authority in its latest National Plan of Integrated Airport Systems, which has registered with the Office of Economic Development and Trade.  Only  the area included within the boundaries of the 
airport is included in the ADZ.  
 Oklahoma - Construction Materials 
 
1. Could the U.S. provide more information on the sectors or industries that have 
benefitted from this program? 
 
Reply 
 No benefits under this program were provided during the reporting period of 2011-2012. In total, 
the program has only been used no more than three times since its inception in 1981. This 
program is available to manufacturing and distribution companies that meet the construction cost and employment thresholds specified in the notification. 
 
2. Could the U.S. clarify the relation, if any,  between this program which provides a sales 
tax exemption and the Sales Tax Refunds for Computer related Products program with 
regards to "new or expanded aircraft ma intenance and manufacturing facilities that 
create 250 or more jobs, with construction investment of $5 million and purchases of at 
least $2 million worth of computers and other listed items?"  
Reply 
 
The Sales Tax Refunds for Computer-Related Produc ts program is unrelated to the Construction 
Materials program’s sales tax exemption or refund. The reference to "construction investment" 
simply pertains to one of the qualification thresholds specified in the notification; the sales tax refunds under this program do not apply to construction costs. 
 
Industrial Revenue Bonds  Canada notes that industrial revenue bond s are a common vehicle used by state and 
local governments to assist in raising reve nue to fund the purchase, construction, or G/SCM/Q2/USA/66 
 
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  improvements of industrial and commercia l property. The most common tax incentive 
provided by these bonds are tax-exempt interest  which offers recipients rates of interest 
that are lower than commercial rates. In some instances, additional tax incentives 
available in conjunction with these bonds in clude sales tax exemptions and property tax 
abatements. Connecticut, Missouri , Nebraska, Vermont and West Virginia reported these 
types of bonds. Can the United States prov ide information on industrial revenue bond 
programs maintained by any other states? 
Reply 
 
The United States provided all available information with respect to industrial revenue bonds. If there is specific information missing of which Canada is aware, we would be pleased to consider it.  
 
 
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