69–006 

110TH CONGRESS REPT. 110–414 " ! HOUSE OF REPRESENTATIVES 1st Session Part 1 

TRADE AND GLOBALIZATION ASSISTANCE ACT OF 2007 

OCTOBER 29, 2007.—Ordered to be printed 

Mr. RANGEL, from the Committee on Ways and Means, 

submitted the following 

R E P O R T 

together with 

MINORITY VIEWS 

[To accompany H.R. 3920] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Ways and Means, to whom was referred the 

bill (H.R. 3920) to amend the Trade Act of 1974 to reauthorize 

trade adjustment assistance, to extend trade adjustment assistance 

to service workers and firms, and for other purposes, having considered the same, report favorably thereon with an amendment and 

recommend that the bill as amended do pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘Trade and Globalization Assistance Act of 2007’’. 

(b) TABLE OF CONTENTS.—The table of contents for this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Findings. 

TITLE I—TRADE ADJUSTMENT ASSISTANCE FOR WORKERS 

Subtitle A—Trade Adjustment Assistance for Service Sector Workers; Expansion of Covered Shifts in 

Production; Expansion of Downstream Secondary Worker Eligibility 

Sec. 101. Extension of trade adjustment assistance to services sector; shifts in production. 

Sec. 102. Determinations by Secretary of Labor. 

Sec. 103. Monitoring and reporting relating to service sector. 

Subtitle B—Industry-Wide Trade Adjustment Assistance 

Sec. 111. Industry-wide determinations. 

Sec. 112. Notifications regarding affirmative determinations and safeguards. 

Sec. 113. Notification to Secretary of Commerce. 

Sec. 114. Restriction on eligibility for program benefits. 


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Subtitle C—Program Benefits 

Sec. 121. Qualifying requirements for workers. 

Sec. 122. Weekly amounts. 

Sec. 123. Limitations on trade readjustment allowances; allowances for extended training and breaks in training. 

Sec. 124. Special rules for calculation of eligibility period. 

Sec. 125. Application of State laws and regulations on good cause for waiver of time limits or late filing of 

claims. 

Sec. 126. Employment and case management services. 

Sec. 127. Training. 

Sec. 128. Prerequisite education; approved training programs. 

Sec. 129. Eligibility for unemployment insurance and program benefits while in training. 

Sec. 130. Administrative expenses and employment and case management services. 

Sec. 131. Job search and relocation allowances. 

Subtitle D—Health Care Provisions 

Sec. 141. Modifications relating health insurance assistance for certain TAA and PBGC pension recipients. 

Subtitle E—Wage Insurance 

Sec. 151. Reemployment trade adjustment assistance program for older workers. 

Subtitle F—Other Matters 

Sec. 161. Agreements with States. 

Sec. 162. Fraud and recovery of overpayments. 

Sec. 163. Technical amendments. 

Sec. 164. Office of Trade Adjustment Assistance; Deputy Assistant Secretary for Trade Adjustment Assistance. 

Sec. 165. Collection of data and reports; information to workers. 

Sec. 166. Extension of TAA program. 

Sec. 167. Judicial review. 

Sec. 168. Liberal construction of certification of workers and firms. 

TITLE II—TRADE ADJUSTMENT ASSISTANCE FOR FIRMS 

Sec. 201. Trade adjustment assistance for firms. 

Sec. 202. Extension of authorization of trade adjustment assistance for firms. 

Sec. 203. Industry-wide programs for the development of new services. 

Sec. 204. Demonstration project on strategic trade transformation assistance. 

TITLE III—UNEMPLOYMENT INSURANCE 

Sec. 301. Short title. 

Sec. 302. Special transfers to State accounts in the Unemployment Trust Fund. 

Sec. 303. Extension of FUTA tax. 

Sec. 304. Safety Net Review Commission. 

TITLE IV—MANUFACTURING REDEVELOPMENT ZONES 

Sec. 401. Manufacturing redevelopment zones. 

Sec. 402. Delay in application of worldwide interest allocation. 

SEC. 2. FINDINGS. 

Congress makes the following findings: 

(1) Since January 2001, the United States economy has lost nearly 3 million 

jobs in the manufacturing sector alone. 

(2) Today, over 7.1 million people in the United States are unemployed, and 

nearly 1.2 million of those individuals have been unemployed for 6 months or 

longer. 

(3) While the United States manufacturing sector has been the hardest hit 

by increased unemployment, the United States service sector has also seen declines as jobs have moved to low-cost labor markets, such as China, India, and 

the Philippines. 

(4) Promoting the economic growth and competitiveness of the United States 

requires—

(A) opening substantial new markets for United States goods, services, 

and farm products; 

(B) building a strong framework of rules for international trade to level 

the playing field for United States workers and businesses in all sectors of 

the economy; and 

(C) helping those affected by globalization overcome its challenges and 

succeed. 

(5) Congress created the trade adjustment assistance program in 1962 to provide United States workers who lose their jobs because of foreign competition 

with government-funded training and associated income support to enable such 

workers to transition to new, good-paying jobs. 

(6) Unfortunately, the trade adjustment assistance program has not kept pace 

with globalization and it is failing to ensure that all workers adversely affected 

by trade receive the assistance they need and deserve. 

(7) Workers in the service sector, who make up approximately 80 percent of 

the United States workforce, are ineligible for trade adjustment assistance. 

(8) Inadequate funding for training leaves many dislocated workers without 

access to the retraining they need to find good-paying jobs. 


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(9) Unnecessary, unduly burdensome, and confusing program eligibility rules 

prevent workers from gaining access to benefits for which they are eligible. 

(10) The health coverage tax credit suffers from fundamental flaws and, as 

a result, the credit is not being used by the vast majority of people who are eligible for it, despite a clear need for access to affordable health care. 

(11) To meet the challenges posed by globalization and to preserve the critical 

role that United States workers play in promoting the strength and prosperity 

of the United States, the trade adjustment assistance program must be reformed. 

TITLE I—TRADE ADJUSTMENT ASSISTANCE 

FOR WORKERS 

Subtitle A—Trade Adjustment Assistance for Service Sector Workers; Expansion of Covered Shifts 

in Production; Expansion of Downstream Secondary Worker Eligibility 

SEC. 101. EXTENSION OF TRADE ADJUSTMENT ASSISTANCE TO SERVICES SECTOR; SHIFTS IN 

PRODUCTION. 

(a) PETITIONS.—Section 221(a) of the Trade Act of 1974 (19 U.S.C. 2271(a)(1)) is 

amended— (1) in paragraph (1)— (A) in the matter preceding subparagraph (A)— (i) by striking ‘‘Secretary’’ and inserting ‘‘Secretary of Labor’’; and 

(ii) by striking ‘‘or subdivision’’ and inserting (or subdivision) or public agency (or subdivision); and 

(B) in subparagraph (A), by striking ‘‘firm)’’ and inserting ‘‘firm, and 

workers in a service sector firm or subdivision of a service sector firm, or 

public agency)’’; and 

(2) in paragraph (3), by inserting ‘‘and on the Website of the Department of 

Labor’’ after ‘‘Federal Register’’. (b) GROUP ELIGIBILITY REQUIREMENTS.— (1) IN GENERAL.—Subsection (a) of section 222 of the Trade Act of 1974 (19 

U.S.C. 2272) is amended—

(A) in the matter preceding paragraph (1), by striking ‘‘(including workers 

in any agricultural firm or subdivision of an agricultural firm)’’ and inserting ‘‘(other than workers in a public agency)’’; 

(B) in paragraph (2)—

(i) in subparagraph (A)(ii), by striking ‘‘like or directly competitive 

with articles produced’’ and inserting ‘‘or services like or directly competitive with articles produced or services provided’’; and 

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

‘‘(B) (i) there has been a shift, by such workers’ firm or subdivision to a 

foreign country, of production of articles, or in provision of services, like or 

directly competitive with articles that are produced, or services that are 

provided, by such firm or subdivision; or 

‘‘(ii) such workers’ firm or subdivision has obtained or is likely to obtain 

articles or services described in clause (i) from a foreign country.’’. 

(2) WORKERS IN PUBLIC AGENCIES.—Such section is further amended—

(A) by redesignating subsections (b) and (c) as subsections (c) and (d), respectively; and 

(B) by inserting after subsection (a) the following: 

‘‘(b) ADVERSELY AFFECTED WORKERS IN PUBLIC AGENCIES.— A group of workers 

in a public agency shall be certified by the Secretary as eligible to apply for adjustment assistance under this chapter pursuant to a petition filed under section 221 

if the Secretary determines that—

‘‘(1) a significant number or proportion of the workers in the public agency, 

or an appropriate subdivision of the public agency, have become totally or partially separated, or are threatened to become totally or partially separated; and 

‘‘(2) the public agency or subdivision has obtained or is likely to obtain from 

a foreign country services that would otherwise be provided by such agency or 

subdivision.’’. 

(3) ADVERSELY AFFECTED SECONDARY WORKERS.—Subsection (c) of such section (as redesignated by paragraph (2)(A) of this subsection) is amended—


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(A) in the matter preceding paragraph (1), by striking ‘‘agricultural firm)’’ and inserting ‘‘agricultural firm, and workers in a service sector firm or 

subdivision of a service sector firm)’’; 

(B) in paragraph (2)— (i) by inserting ‘‘or service’’ after ‘‘related to the article’’; and 

(ii) by striking ‘‘(c)(3)’’ and inserting ‘‘(d)(3)’’; and 

(C) in paragraph (3)(A), by striking ‘‘it supplied to the firm (or subdivision)’’ and inserting ‘‘or services it supplied to the firm (or subdivision)’’. (4) DEFINITIONS AND ELIGIBILITY.—Subsection (d) of such section (as redesignated by paragraph (2)(A) of this subsection) is amended— (A) by striking ‘‘(d) For purposes of this section—’’ and inserting ‘‘(d) 

DEFINITIONS AND ELIGIBILITY.—For purposes of this section:’’ (B) in paragraph (3), to read as follows: ‘‘(3) DOWNSTREAM PRODUCER.—The term ‘downstream producer’ means a firm 

that performs additional, value-added production processes or services for a firm 

or subdivision, including a firm that performs final assembly, finishing, testing, 

packaging, or maintenance or transportation services directly for another firm 

(or subdivision), for articles or services that were the basis for a certification 

of eligibility under subsection (a) of a group of workers employed by such other 

firm (or subdivision).’’; 

(C) in paragraph (4)—

(i) by striking ‘‘for articles’’ and inserting ‘‘, or services, used in the 

production of articles or in the provision of services, as the case may 

be,’’; and 

(ii) by inserting ‘‘(or subdivision)’’ after ‘‘such other firm’’; and 

(D) by adding at the end the following: 

‘‘(5) FIRMS IDENTIFIED BY ITC.—A petition filed under section 221 covering a 

group of workers from a firm or appropriate subdivision of a firm meets the requirements of subsection (a) if the firm is identified by the International Trade 

Commission under subsection (c), (d), or (e) of section 224.’’. 

(5) BASIS FOR SECRETARY’S DETERMINATIONS.—Such section is further amended by adding at the end the following: 

‘‘(e) BASIS FOR SECRETARY’S DETERMINATIONS.—

‘‘(1) INCREASED IMPORTS OF SERVICES.—For purposes of subsection (a)(2)(A)(ii), 

the Secretary may determine that increased imports of like or directly competitive services exist if the customers of the workers’ firm or subdivision accounting for not less than 20 percent of the sales of the workers’ firm or subdivision 

(as the case may be) certify to the Secretary that such customers are obtaining 

such services from a foreign country. 

‘‘(2) SHIFT IN PRODUCTION; OBTAINING ARTICLES OR SERVICES ABROAD.—For 

purposes of subsections (a)(2)(B) and (b)(2), the Secretary may determine that 

there has been a shift in production of articles or provision of services, or that 

a workers’ firm or public agency, or subdivision thereof, has obtained or is likely 

to obtain like or directly competitive articles or services from a foreign country, 

based on a certification thereof from the workers’ firm, public agency, or subdivision (as the case may be). 

‘‘(3) PROCESS AND METHODS FOR OBTAINING CERTIFICATIONS.—

‘‘(A) REQUEST BY PETITIONER.—If requested by the petitioner, the Secretary shall obtain the certifications under paragraphs (1) and (2) in such 

manner as the Secretary determines is appropriate, including by issuing 

subpoenas under section 249 when necessary. 

‘‘(B) PROTECTION OF CONFIDENTIAL INFORMATION.—The Secretary may not 

release information obtained under subparagraph (A) that the Secretary 

considers to be confidential business information unless the party submitting the confidential business information had notice, at the time of submission, that such information would be released by the Secretary, or such 

party subsequently consents to the release of the information. Nothing in 

this subparagraph shall be construed to prohibit a court from requiring the 

submission of such confidential business information to the court in camera.’’. 

(c) DEFINITIONS.—Section 247 of the Trade Act of 1974 (19 U.S.C. 2319) is amended—

(1) in the matter preceding paragraph (1), by striking ‘‘chapter—’’ and inserting ‘‘chapter:’’; 

(2) in paragraph (1)—

(A) by inserting ‘‘, or employment in a public agency or appropriate subdivision of a public agency,’’ after ‘‘of a firm’’; and 

(B) by striking ‘‘such firm or subdivision’’ inserting ‘‘such firm (or subdivision) or public agency (or subdivision)’’; 


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(3) in paragraph (2), by striking ‘‘employment—’’ and all that follows and inserting ‘‘employment has been totally or partially separated from such employment.’’; 

(4) by redesignating paragraphs (8) through (17) as paragraphs (10) through 

(19), respectively; and 

(5) by inserting after paragraph (6) the following: 

‘‘(7) The term ‘public agency’ means a department or agency of a State or local 

government or of the Federal Government. ‘‘(8) The term ‘service sector firm’ means an entity engaged in the business 

of providing services. ‘‘(9) Except as otherwise provided, the term ‘Secretary’ means the Secretary 

of Labor.’’. 

SEC. 102. DETERMINATIONS BY SECRETARY OF LABOR. 

Section 223 of the Trade Act of 1974 (19 U.S.C. 2273) is amended— (1) in subsection (b), by striking ‘‘before his application’’ and all that follows 

and inserting ‘‘before the worker’s application under section 231 occurred more 

than one year before the date of the petition on which such certification was 

granted.’’; 

(2) in subsection (c), by striking ‘‘together with his reasons’’ and inserting ‘‘and on the Website of the Department of Labor, together with the Secretary’s reasons’’; and 

(3) in subsection (d), by striking ‘‘together with his reasons’’ and inserting ‘‘and on the Website of the Department of Labor, together with the Secretary’s reasons’’. 

SEC. 103. MONITORING AND REPORTING RELATING TO SERVICE SECTOR. 

(a) IN GENERAL.—Section 282 of the Trade Act of 1974 (19 U.S.C. 2393) is amended— (1) in the heading, by striking ‘‘system’’ and inserting ‘‘and data collection’’; 

(2) in the first sentence— (A) by striking ‘‘The Secretary’’ and inserting ‘‘(a) MONITORING PRO- GRAMS.—The Secretary’’; 

(B) by inserting ‘‘and services’’ after ‘‘imports of articles’’; 

(C) by inserting ‘‘and domestic provision of services’’ after ‘‘domestic production’’; 

(D) by inserting ‘‘or providing services’’ after ‘‘producing articles’’; and 

(E) by inserting ‘‘, or provision of services,’’ after ‘‘changes in production’’; 

and 

(3) by adding at the end the following: 

‘‘(b) COLLECTION OF DATA AND REPORTS ON SERVICE SECTOR.—

‘‘(1) SECRETARY OF LABOR.—Not later than 90 days after the date of the enactment of the Trade and Globalization Assistance Act of 2007, the Secretary of 

Labor shall implement a system to collect data on adversely affected workers 

employed in the service sector that includes the number of workers by State, 

industry, and cause of dislocation of each worker. 

‘‘(2) SECRETARY OF COMMERCE.—Not later than 1 year after such date of enactment, the Secretary of Commerce shall, in consultation with the Secretary 

of Labor, conduct a study and report to Congress on ways to improve the timeliness and coverage of data on trade in services, including methods to identify 

increased imports due to the relocation of United States firms to foreign countries, and increased imports due to United States firms obtaining services from 

firms in foreign countries.’’. 

(b) CLERICAL AMENDMENT.—The table of contents for title II of the Trade Act of 

1974 is amended by striking the item relating to section 282 and inserting the following: 

‘‘Sec. 282. Trade monitoring and data collection.’’. 

Subtitle B—Industry-Wide Trade Adjustment 

Assistance 

SEC. 111. INDUSTRY-WIDE DETERMINATIONS. 

(a) IN GENERAL.—Subchapter A of chapter 2 of title II of the Trade Act of 1974 

(19 U.S.C. 2271 et seq.) is amended by adding after section 223 the following: 

‘‘SEC. 223A. INDUSTRY-WIDE DETERMINATIONS. 

‘‘(a) INVESTIGATION.—Upon the request of the President or the United States 

Trade Representative, or the resolution of either the Committee on Finance of the 


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Senate or the Committee on Ways and Means of the House of Representatives, with 

respect to a domestic industry, or if the Secretary certifies groups of workers in a 

domestic industry under section 223(a) pursuant to 3 petitions within a 180-day period, the Secretary shall promptly initiate an investigation under this chapter to determine the eligibility for adjustment assistance of—

‘‘(1) all workers in that domestic industry; or 

‘‘(2) all workers in that domestic industry in a specific geographic region. 

‘‘(b) DETERMINATION REGARDING INDUSTRY-WIDE CERTIFICATION.—

‘‘(1) DETERMINATION.—The Secretary shall, not later than 60 days after receiving a request or resolution described in subsection (a) with respect to a domestic industry, or making the third certification of workers in a domestic industry described in subsection (a), as the case may be—

‘‘(A) determine whether all adversely affected workers in that domestic 

industry are eligible to apply for assistance under this subchapter, in accordance with the criteria established under subsection (e); or 

‘‘(B) determine whether all adversely affected workers in that domestic 

industry in a specific geographic region are eligible to apply for assistance 

under this subchapter, in accordance with the criteria established under 

subsection (e). 

‘‘(c) IDENTIFICATION AND CERTIFICATION.—

‘‘(1) AFFIRMATIVE DETERMINATION.—

‘‘(A) IN GENERAL.—Upon making an affirmative determination under subsection (b), the Secretary shall—

‘‘(i) identify all firms operating within the domestic industry described in paragraph (1) or (2) or subsection (b) that are covered by the 

determination; and 

‘‘(ii) certify all workers of such firms as a group of workers eligible 

to apply for assistance under this subchapter, without any other determination of whether such group meets the requirements of section 222. 

‘‘(B) OTHER REQUIREMENTS.—

‘‘(i) IN GENERAL.—Each certification under subparagraph (A)(ii) shall 

specify the date on which the total or partial separation began or 

threatened to begin, except that—

‘‘(I) with respect to a request or a resolution under subsection (a), 

such date may not be a date that precedes one year before the date 

on which the Secretary receives the request or resolution, as the 

case may be; and 

‘‘(II) with respect to the third certification of workers in a domestic industry described in subsection (a), such date may not be a 

date that precedes one year before the date on which the Secretary 

certifies the 3d such petition. 

‘‘(ii) INAPPLICABILITY.—A certification under subparagraph (A)(ii) 

shall not apply to any worker whose last total or partial separation 

from the firm occurred before the applicable date specified in clause (i). 

‘‘(iii) TRAINING BEFORE SEPARATION.—Any worker covered by a certification under subparagraph (A)(ii) shall be deemed to be an adversely 

affected worker for purposes of receiving training under section 236, 

without regard to whether the worker has been totally or partially separated from employment. 

‘‘(2) NEGATIVE DETERMINATION.—If the Secretary makes a negative determination under subsection (b), the Secretary shall notify the Committee on 

Ways and Means of the House of Representatives and the Committee on Finance of the Senate of the reasons for the Secretary’s determination. 

‘‘(3) PUBLICATION.—Upon making a determination under subsection (b), the 

Secretary shall promptly publish a summary of the determination in the Federal Register and on the Website of the Department of Labor, together with the 

reasons for making such determination. 

‘‘(4) TERMINATION.—Whenever the Secretary determines that a certification 

under paragraph (1) is no longer warranted, the Secretary shall terminate the 

certification and promptly have notice of the termination published in the Federal Register and on the Website of the Department of Labor, together with the 

reasons for making such determination under this paragraph. Such termination 

shall apply only with respect to total or partial separations occurring after the 

termination date specified by the Secretary. 

‘‘(d) OUTREACH.—Upon making a certification under subsection (c)(1) of eligibility 

for adjustment assistance under this chapter of a group of workers or all workers 

in a domestic industry, the Secretary shall notify each Governor of a State in which 

the workers are located of the certification. 


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‘‘(e) REGULATIONS.—The Secretary shall, not later than 1 year after the date of 

the enactment of the Trade and Globalization Assistance Act of 2007, issue regulations for making determinations under this section, including criteria for making 

such determinations. The Secretary shall develop such regulations in consultation 

with the Committee on Ways and Means of the House of Representatives and the 

Committee on Finance of the Senate, and the Secretary shall submit such regulations to each such committee at least 60 days before the regulations go into effect. 

‘‘(f) DOMESTIC INDUSTRY DEFINED.—In this section, the term ‘domestic industry’

means an industry in the United States, as that industry is defined by the North 

American Industry Classification System.’’. 

(b) CLERICAL AMENDMENT.—The table of contents for title II of the Trade Act of 

1974 is amended by inserting after the item relating to section 223 the following: 

‘‘Sec. 223A. Industry-wide determinations.’’. 

(c) CONFORMING AMENDMENTS.—Chapter 2 of title II of the Trade Act of 1974 (19 

U.S.C. 2271 et seq.) is amended—

(1) in section 225—

(A) in subsection (a), in the last sentence by inserting ‘‘or 223A’’ after 

‘‘223’’; and 

(B) in subsection (b)—

(i) in paragraph (1), by striking ‘‘subchapter A of this chapter’’ and 

inserting ‘‘this subchapter’’; and 

(ii) in paragraph (2), by striking ‘‘subchapter A’’ and inserting ‘‘this 

subchapter’’; and 

(2) in section 231—

(A) in subsection (a)—

(i) in the matter preceding paragraph (1), by striking ‘‘more than 60 

days’’ and all that follows through ‘‘section 221’’ and inserting ‘‘on or 

after the date of such certification’’; and 

(ii) in paragraph (1)—

(I) in subparagraph (B), by inserting ‘‘or 223A (as the case may 

be)’’ after ‘‘223’’; and 

(II) in subparagraph (C), by inserting ‘‘or 223A(c)(4), as the case 

may be’’ after ‘‘223(d)’’; and 

(B) in subsection (b)—

(i) by striking paragraph (2); and 

(ii) in paragraph (1)—

(I) by striking ‘‘(1)’’; 

(II) by redesignating subparagraphs (A) and (B) as paragraph (1) 

and (2), respectively; 

(III) by redesignating clauses (i) and (ii) as subparagraphs (A) 

and (B), respectively; and 

(IV) by redesignating subclauses (I) and (II) as clauses (i) and 

(ii), respectively. 

SEC. 112. NOTIFICATIONS REGARDING AFFIRMATIVE DETERMINATIONS AND SAFEGUARDS. 

(a) IN GENERAL.—Section 224 of the Trade Act of 1974 (19 U.S.C. 2274) is amended—

(1) in the heading, by striking ‘‘study by secretary of labor when international trade commission

begins investigation’’ and inserting ‘‘study and notifications regarding trade remedy determinations’’; 

(2) in subsection (a), by striking ‘‘Whenever’’ and inserting ‘‘STUDY OF DOMESTIC INDUSTRY.—Whenever’’; 

(3) in subsection (b)—

(A) by striking ‘‘The report’’ and inserting ‘‘REPORT BY THE SECRETARY.—

The report’’; 

(B) by striking ‘‘his report’’ and inserting ‘‘the Secretary’s report’’; and 

(C) by inserting ‘‘and on the Website of the Department of Labor’’ after 

‘‘Federal Register’’; and 

(4) by adding at the end the following: 

‘‘(c) NOTIFICATIONS REGARDING AFFIRMATIVE SAFEGUARD DETERMINATIONS UNDER

SECTION 202.—Upon issuing an affirmative finding regarding serious injury, or the 

threat thereof, to a domestic industry, under section 202, the Commission shall notify the Secretary and the Secretary of Commerce of that finding and the identity 

of the firms which comprise the domestic industry. 

‘‘(d) NOTIFICATIONS REGARDING AFFIRMATIVE DETERMINATIONS UNDER SECTION

421.—Upon issuing an affirmative determination of market disruption, or the threat 

thereof, under section 421, the Commission shall notify the Secretary and the Secretary of Commerce of that determination and the identity of the firms which comprise the affected domestic industry. 


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‘‘(e) NOTIFICATIONS REGARDING AFFIRMATIVE DETERMINATIONS UNDER TARIFF ACT

OF 1930.—Upon issuing a final affirmative determination of injury, or the threat 

thereof, under section 705 or section 735 of the Tariff Act of 1930 (19 U.S.C. 1671d 

and 1673d), the Commission shall notify the Secretary and the Secretary of Commerce of that determination and the identity of the firms which comprise the affected domestic industry. 

‘‘(f) NOTIFICATION OF INDUSTRY AND WORKER REPRESENTATIVES.—Whenever the 

Commission makes a notification under subsection (c), (d), or (e)—

‘‘(1) the Secretary shall—

‘‘(A) notify the firms identified by the Commission as comprising the domestic industry affected, and any certified or recognized union or other duly 

authorized representatives of the workers in such industry, of the allowances, training, employment services, and other benefits available under 

this chapter, and the procedures under this chapter for filing petitions and 

applying for benefits; 

‘‘(B) notify the Governor of each State in which one or more firms described in subparagraph (A) are located of the Commission’s determination 

and the identity of the firms; and 

‘‘(C) provide the necessary assistance to employers, groups of workers, 

and any certified or recognized union or other duly authorized representatives of such workers to file petitions under section 221; and 

‘‘(2) the Secretary of Commerce shall—

‘‘(A) notify the firms identified by the Commission as comprising the domestic industry affected of the benefits under chapter 3 and the procedures 

under such chapter for filing petitions and applying for benefits; and 

‘‘(B) provide the necessary assistance to firms to file petitions under section 251.’’. 

(b) CLERICAL AMENDMENT.—The table of contents for title II of the Trade Act of 

1974 is amended by striking the item relating to section 224 and inserting the following: 

‘‘Sec. 224. Study and notifications regarding trade remedy determinations.’’. 

SEC. 113. NOTIFICATION TO SECRETARY OF COMMERCE. 

Section 225 of the Trade Act of 1974 (19 U.S.C. 2275) is amended by adding at 

the end the following: 

‘‘(c) Upon issuing a certification under section 223 or 223A, the Secretary shall 

notify the Secretary of Commerce of the identify of the firm or firms that are covered by the certification.’’. 

SEC. 114. RESTRICTION ON ELIGIBILITY FOR PROGRAM BENEFITS. 

(a) IN GENERAL.—Subchapter A of chapter 2 of title II of the trade Act of 1974 

(19 U.S.C. 2271 et seq.) is amended by adding at the end the following new section: 

‘‘SEC. 226. RESTRICTION ON ELIGIBILITY FOR PROGRAM BENEFITS. 

‘‘No benefit allowances, training, or other employment services may be provided 

under this chapter to a worker who is an alien unless the alien is an individual lawfully admitted for permanent residence to the United States, is lawfully present in 

the United States, or is permanently residing in the United States under color of 

law.’’. 

(b) CONFORMING AMENDMENT.—The table of contents of the Trade Act of 1974 is 

amended by adding after the item relating to section 225 the following: 

‘‘226. Restriction on eligibility for program benefits.’’. 

Subtitle C—Program Benefits 

SEC. 121. QUALIFYING REQUIREMENTS FOR WORKERS. 

(a) IN GENERAL.—Subsection (a)(5)(A)(ii) of section 231 of the Trade Act of 1974 

(19 U.S.C. 2291) is amended—

(1) by striking subclauses (I) and (II) and inserting the following: 

‘‘(I) in the case of a worker whose most recent total separation from 

adversely affected employment that meets the requirements of paragraphs (1) and (2) occurs after the date on which the Secretary issues 

a certification covering the worker, the last day of the 26th week after 

such total separation, 

‘‘(II) in the case of a worker whose most recent total separation from 

adversely affected employment that meets the requirements of paragraphs (1) and (2) occurs before the date on which the Secretary issues 


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a certification covering the worker, the last day of the 26th week after 

the date of such certification,’’; and 

(2) in subclause (III)—

(A) by striking ‘‘later of the dates specified in subclause (I) or (II)’’ and 

inserting ‘‘date specified in subclause (I) or (II), as the case may be’’; and 

(B) by striking ‘‘or’’ at the end; 

(3) by redesignating subclause (IV) as subclause (V); and 

(4) by inserting after subclause (III) the following: 

‘‘(IV) the last day of such period that the Secretary determines appropriate, if the failure to enroll is due to the failure to provide the worker 

with timely information regarding the date specified in subclause (I) or 

(II), as the case may be, or’’. 

(b) WAIVERS OF TRAINING REQUIREMENTS.—Subsection (c) of such section 231 is 

amended—

(1) in paragraph (1)(B)—

(A) by striking ‘‘The worker possesses’’ and inserting 

‘‘(i) IN GENERAL.—The worker possesses’’; 

(B) by moving the remaining text 2 ems to the right; and 

(C) by adding at the end the following: 

‘‘(ii) MARKETABLE SKILLS DEFINED.—For purposes of clause (i), 

the term ‘marketable skills’ may include the possession of a postgraduate degree from an institution of higher education (as defined 

in section 101(a) of the Higher Education Act of 1965) or equivalent 

foreign institution, or the possession of an equivalent postgraduate 

certification in a specialized field.’’; and 

(2) in paragraph (3)—

(A) in subparagraph (A), by striking ‘‘may authorize’’ and inserting ‘‘shall 

authorize’’; 

(B) by redesignating subparagraph (B) as subparagraph (C); and 

(C) by inserting after subparagraph (A) the following: 

‘‘(B) DURATION OF WAIVERS.—A waiver issued under paragraph (1) by a 

cooperating State shall be effective for not more than 3 months after the 

date on which the waiver is issued, except that the State, upon reviewing 

the waiver, may extend the waiver for an additional period of not more 

than 3 months if the State determines that the waiver should be maintained.’’. 

(c) DETERMINATIONS OF ELIGIBILITY BY STATE EMPLOYEES APPOINTED ON MERIT

BASIS.—Such section 231 is further amended by adding at the end the following: 

‘‘(d) DETERMINATIONS OF ELIGIBILITY BY STATE EMPLOYEES APPOINTED ON MERIT

BASIS.—All determinations of eligibility for trade readjustment allowances under 

this part shall be made by employees of the State who are appointed on a merit 

basis.’’. 

(d) CONFORMING AMENDMENT.—Section 233 of the Trade Act of 1974 (19 U.S.C. 

2293) is amended by striking subsection (b) and redesignating subsections (c) 

through (g) as subsections (b) through (f), respectively. 

SEC. 122. WEEKLY AMOUNTS. 

(a) IN GENERAL.—Section 232 of the Trade Act of 1974 (19 U.S.C. 2292) is amended—

(1) in subsection (a)—

(A) by striking ‘‘subsections (b) and (c)’’ and inserting ‘‘subsections (b), (c), 

and (d)’’; 

(B) by striking ‘‘total unemployment’’ the first place it appears and inserting ‘‘unemployment’’; and 

(C) in paragraph (2), by adding at the end before the period the following: 

‘‘, except that in the case of an adversely affected worker who is participating in full-time training under this chapter, such income shall not include earnings from work for such week that are equal to or less than the 

most recent weekly benefit amount of the unemployment insurance payable 

to the worker for a week of total unemployment preceding the worker’s first 

exhaustion of unemployment insurance (as determined for purposes of section 231(a)(3)(B))’’; 

(2) by redesignating subsections (b) and (c) as subsections (c) and (d), respectively; and 

(3) by inserting after subsection (a) the following: 

‘‘(b)(1) Notwithstanding section 231(a)(3)(B), if an adversely affected worker who 

is participating in training qualifies for unemployment insurance under State law, 

based in whole or in part upon part-time or short-term employment following approval of the worker’s initial trade readjustment allowance application under section 


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231(a), then for any week for which unemployment insurance is payable and for 

which the worker would otherwise be entitled to a trade readjustment allowance 

based upon the certification under section 223, the worker shall, in addition to any 

such unemployment insurance, be paid a trade readjustment allowance in the 

amount described in paragraph (2). 

‘‘(2) The trade readjustment allowance payable under paragraph (1) shall be equal 

to the weekly benefit amount of the unemployment insurance upon which the worker’s trade readjustment allowance was initially determined under subsection (a), reduced by—

‘‘(A) the amount of the unemployment insurance benefit payable to such worker 

for that week of unemployment for which a trade readjustment allowance is payable 

under paragraph (1); and 

‘‘(B) the amounts described in paragraphs (1) and (2) of subsection (a).’’. 

(b) CONFORMING AMENDMENTS.—Section 233 of the Trade Act of 1974 (19 U.S.C. 

2293) is amended—

(1) in subsection (a)(1), by striking ‘‘section 232(a)’’ and inserting ‘‘subsections 

(a) and (b) of section 232’’; and 

(2) in subsection (c), by striking ‘‘section 232(b)’’ and inserting ‘‘section 232(c)’’. 

SEC. 123. LIMITATIONS ON TRADE READJUSTMENT ALLOWANCES; ALLOWANCES FOR EXTENDED TRAINING AND BREAKS IN TRAINING. 

Section 233(a) of the Trade Act of 1974 (19 U.S.C. 2293(a)) is amended—

(1) in paragraph (2), by inserting ‘‘under paragraph (1)’’ after ‘‘trade readjustment allowance’’; 

(2) in paragraph (3)—

(A) in the matter preceding subparagraph (A)—

(i) by striking ‘‘52 additional weeks’’ and inserting ‘‘78 additional 

weeks’’; and 

(ii) by striking ‘‘52-week’’ and inserting ‘‘91-week’’; and 

(B) in the matter following subparagraph (B), by striking ‘‘52-week’’ and 

inserting ‘‘91-week’’. 

SEC. 124. SPECIAL RULES FOR CALCULATION OF ELIGIBILITY PERIOD. 

Section 233 of the Trade Act of 1974 (19 U.S.C. 2293) is amended by adding at 

the end the following: 

‘‘(g) SPECIAL RULE FOR CALCULATING SEPARATION.—Notwithstanding any other 

provision of this chapter, any period during which a judicial or administrative appeal is pending with respect to the denial by the Secretary of a petition under section 223 shall not be counted for purposes of calculating the period of separation 

under subsection (a)(2) or for purposes of calculating time periods specified in section 231(a)(5)(A). 

‘‘(h) SPECIAL RULE FOR JUSTIFIABLE CAUSE.—The Secretary may extend the periods during which trade readjustment allowances are payable to an adversely affected worker under paragraphs (2) and (3) of subsection (a) and under subsection 

(f) (but not the maximum amounts of such allowances that are payable under this 

section), if the Secretary determines that there is justifiable cause for such an extension, such as the failure to provide the worker with timely information, delays in 

certification due to administrative reconsideration or judicial review, or justifiable 

breaks in training that exceed the period allowable under subsection (e).’’. 

SEC. 125. APPLICATION OF STATE LAWS AND REGULATIONS ON GOOD CAUSE FOR WAIVER OF 

TIME LIMITS OR LATE FILING OF CLAIMS. 

Section 234 of the Trade Act of 1974 (19 U.S.C. 2294) is amended—

(1) by striking ‘‘Except where inconsistent’’ and inserting ‘‘(a) IN GENERAL.—

Except where inconsistent’’; and 

(2) by adding at the end the following: 

‘‘(b) STATE LAWS AND REGULATIONS ON GOOD CAUSE FOR WAIVER OF TIME LIMITS

OR LATE FILING OF CLAIMS.—Any law or regulation of a cooperating State under 

section 239 that allows for a waiver for good cause of any time limit, including a 

waiver for good cause to allow the late filing of any claim, for trade readjustment 

allowances or other adjustment assistance under this chapter shall, in the administration of the program by the State under this chapter, apply to the applicable time 

limitation referred to or specified in this chapter or any regulation prescribed to 

carry out this chapter.’’. 

SEC. 126. EMPLOYMENT AND CASE MANAGEMENT SERVICES. 

(a) IN GENERAL.—Section 235 of the Trade Act of 1974 (19 U.S.C. 2295) is amended to read as follows: 


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‘‘SEC. 235. EMPLOYMENT AND CASE MANAGEMENT SERVICES. 

‘‘The Secretary shall provide, directly or through agreements with States under 

section 239, to adversely affected workers covered by a certification under subchapter A of this chapter the following employment and case management services: 

‘‘(1) Comprehensive and specialized assessment of skill levels and service 

needs, including through—

‘‘(A) diagnostic testing and use of other assessment tools; and 

‘‘(B) in-depth interviewing and evaluation to identify employment barriers 

and appropriate employment goals. 

‘‘(2) Development of an individual employment plan to identify employment 

goals and objectives, and appropriate training to achieve those goals and objectives. 

‘‘(3) Information on training available in local and regional areas, information 

on individual counseling to determine which training is suitable training, and 

information on how to apply for such training. 

‘‘(4) Information on how to apply for financial aid, including referring workers 

to educational opportunity centers under section 402F of the Higher Education 

Act of 1965, where applicable, and notifying workers that the workers may ask 

financial aid administrators at institutions of higher education to allow use of 

their current year income in the financial aid process. 

‘‘(5) Short-term prevocational services, including development of learning 

skills, communications skills, interviewing skills, punctuality, personal maintenance skills, and professional conduct to prepare individuals for employment or 

training. 

‘‘(6) Individual career counseling, including job search and placement counseling, during the period in which the individual is receiving a trade adjustment 

allowance or training under this chapter, and for purposes of job placement 

after receiving such training. 

‘‘(7) Provision of employment statistics information, including the provision of 

accurate information relating to local, regional, and national labor market 

areas, including—

‘‘(A) job vacancy listings in such labor market areas; 

‘‘(B) information on jobs skills necessary to obtain jobs identified in job 

vacancy listings described in subparagraph (A); 

‘‘(C) information relating to local occupations that are in demand and 

earnings potential of such occupations; and 

‘‘(D) skills requirements for local occupations described in subparagraph 

(C). 

‘‘(8) Supportive services, including services relating to child care, transportation, dependent care, housing assistance, and need-related payments that are 

necessary to enable an individual to participate in training.’’. 

(b) CLERICAL AMENDMENT.—The item relating to section 235 in the table of contents for title II of the Trade Act of 1974 is amended to read as follows: 

‘‘235. Employment and case management services.’’. 

SEC. 127. TRAINING. 

(a) IN GENERAL.—Subsection (a)(1) of section 236 of the Trade Act of 1974 (19 

U.S.C. 2296) is amended by striking the last sentence. 

(b) FUNDING.—Subsection (a)(2) of such section is amended—

(1) in subparagraph (A), to read as follows: 

‘‘(A) The total amount of payments that may be made under paragraph (1) for 

each of the fiscal years 2008 and 2009 shall not exceed $440,000,000. The total 

amount of payments that may be made under paragraph (1) for fiscal year 2010 and 

each subsequent fiscal year shall not exceed $660,000,000.’’; and 

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

‘‘(B) Not later than 120 days after the date of the enactment of the Trade and 

Globalization Assistance Act of 2007, the Secretary shall establish and implement 

procedures for the allocation among the States in each fiscal year of funds available 

to pay the costs of training for workers under this section. The Secretary shall, at 

least 60 days before the date on which the procedures described in this subparagraph are first implemented, consult with the Committee on Ways and Means of the 

House of Representatives and the Committee on Finance of the Senate with respect 

to such procedures. 

‘‘(C) In establishing and implementing the procedures under subparagraph (B), 

the Secretary shall—

‘‘(i) provide for at least 3 distributions of funds available for training in the 

fiscal year, and, in the first such distribution, disburse not more than 50 percent of the total amount of funds available for training in that fiscal year; 


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‘‘(ii) consider using a broad range of factors for the allocation of training funds 

distributed to States for each fiscal year, including factors such as—

‘‘(I) the number of workers certified under sections 223 and 223A in the 

preceding fiscal year; 

‘‘(II) the total number of workers certified under sections 223 and 223A 

that are enrolled in training approved under this section; 

‘‘(III) the minimum level of funding necessary to provide training approved under this section; and 

‘‘(IV) notifications under the Worker Adjustment and Retraining Notification Act or other layoff notifications; 

‘‘(iii) after the initial distribution of training funds to States at the beginning 

of each fiscal year, provide for subsequent distributions of training funds remaining, based on the factors described in clause (ii) (but, in the case of the 

factor described in subclause (I) of clause (ii), based on data from the preceding 

2 fiscal quarters) if a State requests the distribution of the remaining funds; 

‘‘(iv) ensure that any final distribution of funds during a fiscal year is made 

not later than July 1 of that fiscal year; and 

‘‘(v) develop an explicit policy for re-capture and redistribution of training 

funds, to the extent such re-capture and redistribution of training funds is necessary.’’. 

(c) DETERMINATIONS REGARDING TRAINING.—Subsection (a)(9) of such section is 

amended—

(1) by striking ‘‘The Secretary’’ and inserting ‘‘(A) Subject to subparagraph 

(B), the Secretary’’; and 

(2) by adding at the end the following: 

‘‘(B)(i) In determining under paragraph (1)(E) whether a worker is qualified to undertake and complete training, the Secretary may not disallow training for a period 

longer than the worker’s period of eligibility for trade readjustment allowances 

under part I if the worker demonstrates that the worker has sufficient financial resources to complete the training after the expiration of the worker’s period of eligibility for such trade readjustment allowances. 

‘‘(ii) In determining the reasonable cost of training under paragraph (1)(F) with 

respect to a worker, the Secretary may consider whether other public or private 

funds are reasonably available to the worker, except that the Secretary may not require a worker to obtain such funds as a condition of approval of training under 

paragraph (1).’’. 

(d) DETERMINATIONS OF ELIGIBILITY BY STATE EMPLOYEES APPOINTED ON MERIT

BASIS.—Such section is further amended—

(1) by redesignating subsections (e) and (f) as subsections (f) and (g), respectively; and 

(2) by inserting after subsection (d) the following: 

‘‘(e) DETERMINATIONS OF ELIGIBILITY BY STATE EMPLOYEES APPOINTED ON MERIT

BASIS.—All determinations of eligibility for training under this section shall be 

made by employees of the State who are appointed on a merit basis.’’. 

(e) GAO STUDY AND REPORT.—

(1) STUDY.—The Comptroller General of the United States shall conduct a 

study of the procedures for the allocation of training funds for workers under 

subparagraphs (B) and (C) of section 236(a)(2) of the Trade Act of 1974 (19 

U.S.C. 2296), as added by subsection (a) of this section, that are established and 

implemented by the Secretary of Labor pursuant to such section. In carrying 

out the study, the Comptroller General shall examine the overall adequacy of 

funding for training for workers by State and the effectiveness of the procedures 

for allocating training funds between States and among workers. 

(2) REPORTS.—

(A) INTERIM REPORT.—The Comptroller General of the United States shall 

submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate an interim report that 

contains the results of the study conducted under paragraph (1) for the first 

fiscal year with respect to which the procedures described in paragraph (1) 

are implemented. 

(B) FINAL REPORT.—The Comptroller General of the United States shall 

submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a final report that contains the results of the study conducted under paragraph (1) for the first 

three fiscal years with respect to which the procedures described in paragraph (1) are implemented. 


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SEC. 128. PREREQUISITE EDUCATION; APPROVED TRAINING PROGRAMS. 

(a) IN GENERAL.—Section 236(a)(5) of the Trade Act of 1974 (19 U.S.C. 2296(a)(5)) 

is amended—

(1) in subparagraph (A)—

(A) by striking ‘‘and’’ at the end of clause (i); 

(B) by adding ‘‘and’’ at the end of clause (ii); and 

(C) by inserting after clause (ii) the following: 

‘‘(iii) apprenticeship programs registered under the National Apprenticeship Act (29 U.S.C. 50 et seq.),’’; 

(2) by redesignating subparagraphs (E) and (F) as subparagraphs (F) and (G), 

respectively; 

(3) by inserting after subparagraph (D) the following: 

‘‘(E) any program of prerequisite education or coursework required to enroll 

in training that may be approved under this section,’’; 

(4) in subparagraph (F)(ii), as redesignated by paragraph (1), by striking 

‘‘and’’ at the end; 

(5) in subparagraph (G), as redesignated by paragraph (1), by striking the period at the end and inserting ‘‘, and’’; and 

(6) by adding at the end the following: 

‘‘(H) any training program or coursework at an accredited institution of higher education (as defined in section 101(a) of the Higher Education Act of 1965), 

including a training program or coursework for the purpose of—

‘‘(i) obtaining a degree or certification; or 

‘‘(ii) completing a degree or certification that the worker had previously 

begun at an accredited institution of higher education. 

The Secretary may not limit approval of a training program under paragraph (1) 

to a program provided pursuant to title I of the Workforce Investment Act of 1998.’’. 

(b) CONFORMING AMENDMENTS.—Section 233 of the Trade Act of 1974 (19 U.S.C. 

2293) is amended—

(1) in subsection (a)(2), by inserting ‘‘prerequisite education or’’ after ‘‘requires 

a program of’’; and 

(2) in subsection (f) (as redesignated by section 121(d) of this Act), by inserting ‘‘prerequisite education or’’ after ‘‘includes a program of’’. 

SEC. 129. ELIGIBILITY FOR UNEMPLOYMENT INSURANCE AND PROGRAM BENEFITS WHILE IN 

TRAINING. 

(a) IN GENERAL.—Section 236(d) of the Trade Act of 1974 (19 U.S.C. 2296(d)) is 

amended to read as follows: 

‘‘(d) ELIGIBILITY.—A worker may not be determined to be ineligible or disqualified 

for unemployment insurance or program benefits under this subchapter—

‘‘(1) because the worker—

‘‘(A) is enrolled in training approved under subsection (a); or 

‘‘(B) left work—

‘‘(i) that was not suitable employment to enter such training; or 

‘‘(ii) that the worker engaged in on a temporary basis during a break 

in such training or a delay in the commencement of such training; or 

‘‘(2) because the provisions of State law or Federal unemployment insurance 

law relating to availability for work, active search for work, or refusal to accept 

work apply to a week of training approved under subsection (a).’’. 

(b) DEFINITION.—Subchapter B of chapter 2 of title II of the Trade Act of 1974 

(19 U.S.C. 2291 et seq.) is amended—

(1) in section 233(d) (as redesignated by section 121(d) of this Act), by inserting ‘‘suitable’’ before ‘‘on-the-job training’’; and 

(2) in section 236—

(A) by inserting ‘‘suitable’’ before ‘‘on-the-job training’’ each place it appears; and 

(B) by adding at the end the following: 

‘‘(h) SUITABLE ON-THE-JOB TRAINING.—For purposes of this section, the term ‘suitable on-the-job training’ means on-the-job training—

‘‘(1) that can reasonably be expected to lead to suitable employment; 

‘‘(2) that is compatible with the skills of the worker; 

‘‘(3) that—

‘‘(A) involves a curriculum through which the worker learns the skills 

necessary for the job for which the worker is being trained; and 

‘‘(B) can be measured by benchmarks that indicate that the worker is 

learning such skills; and 

‘‘(4) that is certified by the State as an on-the-job training program that meets 

the requirements of paragraph (3).’’. 


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SEC. 130. ADMINISTRATIVE EXPENSES AND EMPLOYMENT AND CASE MANAGEMENT SERVICES. 

(a) IN GENERAL.—Part II of subchapter B of chapter 2 of title II of the Trade Act 

of 1974 (19 U.S.C. 2295 et seq.) is amended by inserting after section 236 the following: 

‘‘SEC. 236A. ADDITIONAL PAYMENTS FOR ADMINISTRATIVE EXPENSES AND EMPLOYMENT 

AND CASE MANAGEMENT SERVICES. 

‘‘(a) ADMINISTRATIVE EXPENSES.—

‘‘(1) IN GENERAL.—The Secretary shall provide to each State that receives a 

payment under section 236 for a fiscal year an additional payment for such fiscal year in an amount that is not less than 15 percent of the amount of the 

payment under section 236. 

‘‘(2) USE OF FUNDS.—A State that receives an additional payment under paragraph (1) shall use the payment for administration of the trade adjustment assistance for workers program under this chapter, including for—

‘‘(A) processing of waivers of training requirements under section 231; 

‘‘(B) collecting of data required under this chapter; and 

‘‘(C) providing services under section 235. 

‘‘(3) ADMINISTRATION REQUIREMENT.—Funds provided to a State under this 

subsection for a fiscal year that are in excess of the amount of funds provided 

to the State for administration of the trade adjustment assistance for workers 

program under this chapter for fiscal year 2007 may only be administered by 

employees of the State who are appointed on a merit basis. 

‘‘(b) ADDITIONAL FUNDING FOR EMPLOYMENT AND CASE MANAGEMENT SERVICES.—

‘‘(1) IN GENERAL.—The Secretary shall provide to each State that receives a 

payment under section 236 for a fiscal year an additional payment for such fiscal year in an amount that is not less than .06 percent of the total amount of 

payments that may be made in that fiscal year as described in section 236(a)(2). 

‘‘(2) USE OF FUNDS.—A State that receives an additional payment under paragraph (1) shall use the payment for providing services under section 235. 

‘‘(3) ADMINISTRATION REQUIREMENT.—Funds provided to a State under this 

subsection may only be administered by employees of the State who are appointed on a merit basis. 

‘‘(c) FUNDING.—Funds provided to the States under this section shall not be counted toward the limitation contained in section 236(a)(2)(A).’’. 

(b) CLERICAL AMENDMENT.—The table of contents for title II of the Trade Act of 

1974 is amended by inserting after the item relating to section 236 the following: 

‘‘Sec. 236A. Additional payments for administrative expenses and employment and case management services.’’. 

SEC. 131. JOB SEARCH AND RELOCATION ALLOWANCES. 

(a) JOB SEARCH ALLOWANCES.—Section 237 of the Trade Act of 1974 (19 U.S.C. 

2297) is amended—

(1) in subsection (a)(2)(C)(ii), by striking ‘‘, unless the worker received a waiver under section 231(c)’’; and 

(2) in subsection (b)—

(A) in paragraph (1), by striking ‘‘90 percent of the cost of’’ and inserting 

‘‘all’’; and 

(B) in paragraph (2), by striking ‘‘$1,250’’ and inserting ‘‘$1,500’’. 

(b) RELOCATION ALLOWANCES.—Section 238 of the Trade Act of 1974 (19 U.S.C. 

2298) is amended—

(1) in subsection (a)(2)(E)(ii), by striking ‘‘, unless the worker received a waiver under section 231(c)’’; and 

(2) in subsection (b)—

(A) in paragraph (1), by striking ‘‘90 percent of the’’ and inserting ‘‘all’’; 

and 

(B) in paragraph (2), by striking ‘‘$1,250’’ and inserting ‘‘$1,500’’. 

Subtitle D—Health Care Provisions 

SEC. 141. MODIFICATIONS RELATING HEALTH INSURANCE ASSISTANCE FOR CERTAIN TAA 

AND PBGC PENSION RECIPIENTS. 

(a) INCREASE IN CREDIT PERCENTAGE AMOUNT.—

(1) IN GENERAL.—Subsection (a) of section 35 of the Internal Revenue Code 

of 1986 is amended by striking ‘‘65 percent’’ and inserting ‘‘85 percent’’. 

(2) CONFORMING AMENDMENT.—Subsection (b) of section 7527 of such Code is 

amended by striking ‘‘65 percent’’ and inserting ‘‘85 percent’’. 


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(b) TAA RECIPIENTS RECEIVING UNEMPLOYMENT COMPENSATION AND NOT EN- ROLLED IN TRAINING PROGRAM ELIGIBLE FOR CREDIT.—Paragraph (2) of section 35(c) 

of such Code is amended to read as follows: ‘‘(2) ELIGIBLE TAA RECIPIENT.—The term ‘eligible TAA recipient’ means, with 

respect to any month, any individual who— ‘‘(A) is receiving for any day of such month a trade readjustment allowance under chapter 2 of title II of the Trade Act of 1974, or ‘‘(B) who is receiving unemployment compensation (as defined in section 

85) for such month and who would be eligible to receive such allowance for 

such month if section 231 of such Act were applied without regard to subsections (a)(3)(B) and (a)(5) thereof. 

An individual shall continue to be treated as an eligible TAA recipient during 

the first month that such individual would otherwise cease to be an eligible 

TAA recipient by reason of the preceding sentence.’’. (c) ELIGIBILITY FOR ELIGIBLE INDIVIDUALS MADE RETROACTIVE TO TAA-RELATED

LOSS OF EMPLOYMENT.—Subsection (c) of section 35 of such Code is amended by 

adding at the end the following new paragraph: ‘‘(5) RETROACTIVE ELIGIBILITY FOR TAA RECIPIENTS.—In the case of any individual who is an eligible TAA recipient or eligible alternative TAA recipient for 

any month, such individual shall be treated as an eligible individual for any 

month which precedes such month and which begins after the later of—

‘‘(A) the date of the separation from employment which gives rise to such 

individual being an eligible TAA recipient or eligible alternative TAA recipient, or 

‘‘(B) December 31, 2007.’’. 

(d) CONTINUED QUALIFICATION OF FAMILY MEMBERS AFTER CERTAIN EVENTS.—

(1) IN GENERAL.—Subsection (g) of section 35 of such Code is amended by redesignating paragraph (9) as paragraph (10) and inserting after paragraph (8) 

the following new paragraph: 

‘‘(9) CONTINUED QUALIFICATION OF FAMILY MEMBERS AFTER CERTAIN EVENTS.—

‘‘(A) MEDICARE ELIGIBILITY.—In the case of any month which would be an 

eligible coverage month with respect to an eligible individual but for subsection (f)(2)(A), such month shall be treated as an eligible coverage month 

with respect to such eligible individual solely for purposes of determining 

the amount of the credit under this section with respect to any qualifying 

family members of such individual (and any advance payment of such credit 

under section 7527). This subparagraph shall only apply with respect to the 

first 36 months after such eligible individual is first entitled to the benefits 

described in subsection (f)(2)(A). 

‘‘(B) DIVORCE.—In the case of the finalization of a divorce between an eligible individual and such individual’s spouse, such spouse shall be treated 

as an eligible individual for purposes of this section and section 7527 for 

a period of 36 months beginning with the date of such finalization, except 

that the only qualifying family members who may be taken into account 

with respect to such spouse are those individuals who were qualifying family members immediately before such finalization. 

‘‘(C) DEATH.—In the case of the death of an eligible individual—

‘‘(i) any spouse of such individual (determined at the time of such 

death) shall be treated as an eligible individual for purposes of this section and section 7527 for a period of 36 months beginning with the date 

of such death, except that the only qualifying family members who may 

be taken into account with respect to such spouse are those individuals 

who were qualifying family members immediately before such death, 

and 

‘‘(ii) any individual who was a qualifying family member of the decedent immediately before such death (or, in the case of an individual to 

whom paragraph (4) applies, the taxpayer to whom the deduction under 

section 151 is allowable) shall be treated as an eligible individual for 

purposes of this section and section 7527 for a period of 36 months beginning with the date of such death, except that in determining the 

amount of such credit only such qualifying family member may be 

taken into account.’’. 

(2) CONFORMING AMENDMENT.—Section 173(f) of the Workforce Investment 

Act of 1998 (29 U.S.C. 2918(f)) is amended by adding at the end the following: 

‘‘(8) CONTINUED QUALIFICATION OF FAMILY MEMBERS AFTER CERTAIN EVENTS.—

‘‘(A) MEDICARE ELIGIBILITY.—In the case of any month which would be an 

eligible coverage month with respect to an eligible individual but for paragraph (7)(B)(i), such month shall be treated as an eligible coverage month 

with respect to such eligible individual solely for purposes of determining 


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the eligibility of qualifying family members of such individual under this 

subsection. This subparagraph shall only apply with respect to the first 36 

months after such eligible individual is first entitled to the benefits described in paragraph (7)(B)(i). ‘‘(B) DIVORCE.—In the case of the finalization of a divorce between an eligible individual and such individual’s spouse, such spouse shall be treated 

as an eligible individual for purposes of this subsection for a period of 36 

months beginning with the date of such finalization, except that the only 

qualifying family members who may be taken into account with respect to 

such spouse are those individuals who were qualifying family members immediately before such finalization. ‘‘(C) DEATH.—In the case of the death of an eligible individual— ‘‘(i) any spouse of such individual (determined at the time of such 

death) shall be treated as an eligible individual for purposes of this 

subsection for a period of 36 months beginning with the date of such 

death, except that the only qualifying family members who may be 

taken into account with respect to such spouse are those individuals 

who were qualifying family members immediately before such death, 

and ‘‘(ii) any individual who was a qualifying family member of the decedent immediately before such death shall be treated as an eligible individual for purposes this subsection for a period of 36 months beginning 

with the date of such death, except that no qualifying family members 

may be taken into account with respect to such individual.’’. 

(e) MODIFICATION OF CREDITABLE COVERAGE REQUIREMENT.—

(1) IN GENERAL.—Subparagraph (B) of section 35(e)(2) of such Code is amended to read as follows: 

‘‘(B) QUALIFYING INDIVIDUAL.—For purposes of this paragraph, the term 

‘qualifying individual’ means an eligible individual and the qualifying family members of such individual if such individual meets the requirements 

of clauses (iii) and (iv) of subsection (b)(1)(A) and—

‘‘(i) in the case of an eligible TAA recipient or an eligible alternative 

TAA recipient, has (as of the date on which the individual seeks to enroll in the coverage described in subparagraphs (B) through (H) of 

paragraph (1)) a period of creditable coverage (as defined in section 

9801(c)), or 

‘‘(ii) in the case of an eligible PBGC pension recipient, enrolls in such 

coverage during the 90-day period beginning on the later of—

‘‘(I) the last day of the first month with respect to which such 

recipient becomes an eligible PBGC pension recipient, or 

‘‘(II) the date of the enactment of this subparagraph.’’. 

(2) CONFORMING AMENDMENT.—Clause (ii) of section 172(f)(2)(B) of the Workforce Investment Act of 1998 (29 U.S.C. 2918(f)(2)(B)) is amended to read as follows: 

‘‘(ii) QUALIFYING INDIVIDUAL.—For purposes of this subparagraph, the 

term ‘qualifying individual’ means an eligible individual and the qualifying family members of such individual if such individual meets the 

requirements of clauses (iii) and (iv) of section 35(b)(1)(A) of the Internal Revenue Code of 1986 and—

‘‘(I) in the case of an eligible TAA recipient or an eligible alternative TAA recipient, has (as of the date on which the individual 

seeks to enroll in the coverage described in clauses (ii) through 

(viii) of subparagraph (A)) a period of creditable coverage (as defined in section 9801(c) of such Code), or 

‘‘(II) in the case of an eligible PBGC pension recipient, enrolls in 

such coverage during the 90-day period beginning on the later of—

‘‘(aa) the last day of the first month with respect to which 

such recipient becomes an eligible PBGC pension recipient, or 

‘‘(bb) the date of the enactment of this clause.’’. 

(3) OUTREACH.—The Secretary of the Treasury shall carry out a program to 

notify individuals prior to their becoming eligible PBGC pension recipients (as 

defined in section 35 of the Internal Revenue Code of 1986) of the requirement 

of subsection (e)(2)(B)(ii) of such section, as added by this subsection. 

(f) TAA PRE-CERTIFICATION PERIOD RULE FOR PURPOSES OF DETERMINING WHETHER THERE IS A 63-DAY LAPSE IN CREDITABLE COVERAGE.—

(1) IRC AMENDMENT.—Section 9801(c)(2) of the Internal Revenue Code of 

1986 (relating to not counting periods before significant breaks in creditable 

coverage) is amended by adding at the end the following new subparagraph: 

‘‘(D) TAA-ELIGIBLE INDIVIDUALS.—


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‘‘(i) TAA PRE-CERTIFICATION PERIOD RULE.—In the case of a TAA-eligible individual, the period beginning on the date the individual has a 

TAA-related loss of coverage and ending on the date which is 5 days 

after the postmark date of the notice by the Secretary (or by any person 

or entity designated by the Secretary) that the individual is eligible for 

a qualified health insurance costs credit eligibility certificate for purposes of section 7527 shall not be taken into account in determining the 

continuous period under subparagraph (A). ‘‘(ii) DEFINITIONS.—The terms ‘TAA-eligible individual’, and ‘TAA-related loss of coverage’ have the meanings given such terms in section 

4980B(f)(5)(C)(iv).’’. (2) ERISA AMENDMENT.—Section 701(c)(2) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1181(c)(2)) is amended by adding at the 

end the following new subparagraph: ‘‘(C) TAA-ELIGIBLE INDIVIDUALS.— ‘‘(i) TAA PRE-CERTIFICATION PERIOD RULE.—In the case of a TAA-eligible individual, the period beginning on the date the individual has a 

TAA-related loss of coverage and ending on the date that is 5 days after 

the postmark date of the notice by the Secretary (or by any person or 

entity designated by the Secretary) that the individual is eligible for a 

qualified health insurance costs credit eligibility certificate for purposes 

of section 7527 of the Internal Revenue Code of 1986 shall not be taken 

into account in determining the continuous period under subparagraph 

(A). 

‘‘(ii) DEFINITIONS.—The terms ‘TAA-eligible individual’, and ‘TAA-related loss of coverage’ have the meanings given such terms in section 

605(b)(4)(c).’’. 

(3) PHSA AMENDMENT.—Section 2701(c)(2) of the Public Health Service Act 

(42 U.S.C. 300gg(c)(2)) is amended by adding at the end the following new subparagraph: 

‘‘(C) TAA-ELIGIBLE INDIVIDUALS.—

‘‘(i) TAA PRE-CERTIFICATION PERIOD RULE.—In the case of a TAA-eligible individual, the period beginning on the date the individual has a 

TAA-related loss of coverage and ending on the date that is 5 days after 

the postmark date of the notice by the Secretary (or by any person or 

entity designated by the Secretary) that the individual is eligible for a 

qualified health insurance costs credit eligibility certificate for purposes 

of section 7527 of the Internal Revenue Code of 1986 shall not be taken 

into account in determining the continuous period under subparagraph 

(A). 

‘‘(ii) DEFINITIONS.—The terms ‘TAA-eligible individual’, and ‘TAA-related loss of coverage’ have the meanings given such terms in section 

2205(b)(4)(c).’’. 

(g) RATING SYSTEM REQUIREMENT FOR CERTAIN STATE-BASED COVERAGE.—

(1) IN GENERAL.—Subparagraph (A) of section 35(e)(2) of such Code is amended by adding at the end the following new clause: 

‘‘(v) RATING SYSTEM REQUIREMENT.—In the case of coverage described 

in paragraph (1)(F)(ii), the premiums for such coverage are restricted, 

based on a community rating system with respect to eligible individuals 

and their qualifying family members, or based on a rate-band system 

under which the maximum rate which may be charged does not exceed 

150 percent of the standard rate with respect to eligible individuals and 

their qualifying family members.’’. 

(2) CONFORMING AMENDMENT.—Clause (i) of section 173(f)(2)(B) of the Workforce Investment Act of 1998 (29 U.S.C. 2918(f)(2)(B)) is amended by adding at 

the end the following new subclause: 

‘‘(V) RATING SYSTEM REQUIREMENT.—In the case of coverage described in subparagraph (A)(vi)(II), the premiums for such coverage 

are restricted, based on a community rating system with respect to 

eligible individuals and their qualifying family members, or based 

on a rate-band system under which the maximum rate which may 

be charged does not exceed 150 percent of the standard rate with 

respect to eligible individuals and their qualifying family members.’’. 

(h) TERMINATION OF PROGRAM.—

(1) IN GENERAL.—Section 35 of such Code is amended by adding at the end 

the following new subsection: 

‘‘(h) TERMINATION.—An individual shall not be treated as an eligible individual for 

purposes of this section or section 7527 for any month beginning after December 31, 


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2009, unless such individual was an eligible individual for a continuous period of 

months ending with such month and beginning before such date.’’. (2) CONFORMING AMENDMENT.—Subsection (f) of section 173 of the Workforce 

Investment Act of 1998 (29 U.S.C. 2918) is amended by adding at the end the 

following new paragraph: ‘‘(8) TERMINATION.—An individual shall not be treated as an eligible individual for purposes of this subsection for any month beginning after December 

31, 2009, unless such individual was an eligible individual for a continuous period of months ending with such month and beginning before such date.’’. (i) EFFECTIVE DATE.— (1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to months beginning after December 31, 

2007, in taxable years ending after such date. 

(2) RATING SYSTEM REQUIREMENT.—The amendments made by subsection (g) 

shall apply to months beginning after March 31, 2008, in taxable years ending 

after such date. 

(3) DISCRETION TO DELAY EFFECTIVE DATE FOR PURPOSES OF ADVANCE PAY- MENT PROGRAM.—Solely for purposes of carrying out the advance payment program under section 7527, the Secretary may provide that one or more amendments made by subsections (b), (c), and (d) shall not apply to one or more 

months beginning before March 31, 2008, to the extent that the Secretary determines that such delay is necessary to properly implement any such amendment 

as part of such program. 

(j) GAO STUDY AND REPORT.— (1) STUDY.—The Comptroller General of the United States shall conduct a 

study regarding the health insurance tax credit allowed under section 35 of the 

Internal Revenue Code of 1986. 

(2) REPORT.—Not later than March 1, 2009, the Comptroller General shall 

submit a report to Congress regarding the results of the study conducted under 

paragraph (1). Such report shall include an analysis of— (A) the administrative costs— (i) of the Federal Government with respect to such credit and the advance payment of such credit under section 7527 of such Code, and 

(ii) of providers of qualified health insurance with respect to providing such insurance to eligible individuals and their qualifying family 

members, 

(B) the health status and relative risk status of eligible individuals and 

qualifying family members covered under such insurance, 

(C) participation in such credit and the advance payment of such credit 

by eligible individuals and their qualifying family members, including the 

reasons why such individuals did or did not participate and the effect of the 

amendments made by this section on such participation, and 

(D) the extent to which eligible individuals and their qualifying family 

members— (i) obtained health insurance other than qualifying health insurance, or (ii) went without health insurance coverage. 

(3) ACCESS TO RECORDS.—For purposes of conducting the study required 

under this subsection, the Comptroller General and any of his duly authorized 

representatives shall have access to, and the right to examine and copy, all documents, records, and other recorded information—

(A) within the possession or control of providers of qualified health insurance, and 

(B) determined by the Comptroller General (or any such representative) 

to be relevant to the study. 

The Comptroller General shall not disclose the identity of any provider of qualified health insurance or any eligible individual in making any information obtained under this section available to the public. 

(4) DEFINITIONS.—Any term which is defined in section 35 of the Internal 

Revenue Code of 1986 shall have the same meaning when used in this subsection. 

Subtitle E—Wage Insurance 

SEC. 151. REEMPLOYMENT TRADE ADJUSTMENT ASSISTANCE PROGRAM FOR OLDER WORKERS. 

(a) IN GENERAL.—Section 246 of the Trade Act of 1974 (19 U.S.C. 2318) is amended—


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(1) by amending the heading to read as follows: ‘‘reemployment trade adjustment assist- ance’’; 

(2) in subsection (a)—

(A) in paragraph (1), by striking ‘‘alternative’’ and inserting ‘‘reemployment’’; 

(B) in paragraph (2)(A), by striking ‘‘for a period not to exceed 2 years’’

and inserting ‘‘for the eligibility period under paragraph (3)(C)’’; and 

(C) by striking paragraphs (3) through (5) and inserting the following: 

‘‘(3) ELIGIBILITY.—

‘‘(A) IN GENERAL.—A group of workers certified under subchapter A as eligible for adjustment assistance under subchapter A is eligible for benefits 

described in paragraph (2) under the program established under paragraph 

(1). 

‘‘(B) INDIVIDUAL ELIGIBILITY.—A worker in a group of workers described 

in subparagraph (A) may elect to receive benefits described in paragraph 

(2) under the program established under paragraph (1) if the worker—

‘‘(i) is at least 50 years of age; 

‘‘(ii) earns not more than $60,000 each year in wages from reemployment; 

‘‘(iii)(I) is employed on a full-time basis as defined by State law in 

the State in which the worker is employed; or 

‘‘(II) is employed at least 20 hours per week and is enrolled in training approved under section 236; and 

‘‘(iv) does not return to the employment from which the worker was 

separated. 

In the case of a worker described in clause (iii)(II), the percentage referred 

to in paragraph (2)(A) shall be deemed to be a percentage equal to 1⁄2 of 

the ratio of weekly hours of employment referred to in clause (iii)(II) to 

weekly hours of employment of that worker at the time of separation (but 

not more than 50 percent). 

‘‘(C) ELIGIBILITY PERIOD FOR PAYMENTS.—A worker in a group of workers 

described in subparagraph (A) may receive payments described in paragraph (2)(A) under the program established under paragraph (1) for a period not to exceed 2 years from the date on which the worker exhausts all 

rights to unemployment insurance based on the separation of the worker 

from adversely affected employment or the date on which the worker obtains reemployment, whichever is earlier. 

‘‘(D) TRAINING.—A worker described in subparagraph (B) shall be eligible 

to receive training approved under section 236. 

‘‘(4) TOTAL AMOUNT OF PAYMENTS.—The payments described in paragraph 

(2)(A) made to a worker may not exceed $12,000 per worker during the eligibility period under paragraph (3)(C). 

‘‘(5) LIMITATION ON OTHER BENEFITS.—A worker described in paragraph (3) 

may not receive a trade readjustment allowance under part I of subchapter B 

during any week for which the worker receives a payment described in paragraph (2)(A).’’; and 

(3) in subsection (b)(2), by striking ‘‘subsection (a)(3)(B)’’ and inserting ‘‘subsection (a)(3)’’. 

(b) EXTENSION OF PROGRAM.—Subsection (b)(1) of such section is amended by 

striking ‘‘5’’ and inserting ‘‘10’’. 

(c) CLERICAL AMENDMENT.—The table of contents for title II of the Trade Act of 

1974 is amended by striking the item relating to section 246 and inserting the following: 

‘‘Sec. 246. Reemployment trade adjustment assistance program.’’. 

Subtitle F—Other Matters 

SEC. 161. AGREEMENTS WITH STATES. 

(a) IN GENERAL.—Subsection (a) of section 239 of the Trade Act of 1974 (19 U.S.C. 

2311) is amended— 

(1) by striking ‘‘will’’ each place it appears and inserting ‘‘shall’’; and 

(2) in clause (2), to read as follows: ‘‘(2) in accordance with subsection (f), shall 

provide adversely affected workers covered by a certification under subchapter 

A the employment and case management services described in section 235’’. 

(b) OUTREACH.—Subsection (f) of such section is amended— 

(1) in paragraph (3), by striking ‘‘and’’ at the end; 

(2) by striking paragraph (4) and inserting the following: 


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‘‘(4) perform outreach, intake (which may include worker profiling) and orientation for assistance and benefits available under this chapter for adversely 

affected workers covered by a certification under subchapter A of this chapter, 

and’’; and 

(3) by adding at the end the following: 

‘‘(5) provide adversely affected workers covered by a certification under subchapter A of this chapter with employment and case management services described in section 235.’’. 

SEC. 162. FRAUD AND RECOVERY OF OVERPAYMENTS. 

Section 243(a)(1) of the Trade Act of 1974 (19 U.S.C. 2315(a)(1)) is amended— (1) in the matter preceding subparagraph (A)— (A) by striking ‘‘may waive’’ and inserting ‘‘shall waive’’; and 

(B) by striking ‘‘, in accordance with guidelines prescribed by the Secretary,’’ and 

(2) in subparagraph (B), by striking ‘‘would be contrary to equity and good 

conscience’’ and inserting ‘‘would cause a financial hardship for the individual 

(or the individual’s household, if applicable) when taking into consideration the 

income and resources reasonably available to the individual (or household) and 

other ordinary living expenses of the individual (or household)’’. 

SEC. 163. TECHNICAL AMENDMENTS. 

(a) IN GENERAL.—Section 249 of the Trade Act of 1974 (19 U.S.C. 2321) is amended— (1) in the heading, by striking ‘‘subpena’’ and inserting ‘‘subpoena’’; and 

(2) in the text, by striking ‘‘subpena’’ and inserting ‘‘subpoena’’ each place it 

appears. 

(b) CLERICAL AMENDMENT.—The item relating to section 249 in the table of contents for title II of the Trade Act of 1974 is amended to read as follows: 

‘‘249. Subpoena power.’’. 

SEC. 164. OFFICE OF TRADE ADJUSTMENT ASSISTANCE; DEPUTY ASSISTANT SECRETARY FOR 

TRADE ADJUSTMENT ASSISTANCE. 

(a) IN GENERAL.—Subchapter C of chapter 2 of title II of the Trade Act of 1974 

(19 U.S.C. 2311 et seq.) is amended by adding at the end the following: 

‘‘SEC. 250. OFFICE OF TRADE ADJUSTMENT ASSISTANCE; DEPUTY ASSISTANT SECRETARY 

FOR TRADE ADJUSTMENT ASSISTANCE. 

‘‘(a) ESTABLISHMENT.—There is established in the Department of Labor an office 

to be known as the Office of Trade Adjustment Assistance (hereinafter in this section referred to as the ‘Office’). ‘‘(b) HEAD OF OFFICE.—The head of the Office shall be the Deputy Assistant Secretary for Trade Adjustment Assistance (hereinafter in this section referred to as 

the ‘Deputy Assistant Secretary’), who shall be appointed by the President, by and 

with the advice and consent of the Senate. ‘‘(c) PRINCIPLE FUNCTIONS.—The principle functions of the Deputy Assistant Secretary shall be— ‘‘(1) to oversee and implement the administration of trade adjustment assistance for workers under this chapter; and ‘‘(2) to carry out functions delegated to the Secretary of Labor under this 

chapter, including— ‘‘(A) making determinations under section 223 or 223A; 

‘‘(B) providing information about the program and assisting groups of 

workers and other parties to prepare petitions or applications for program 

benefits under section 225; ‘‘(C) ensuring workers covered by a certification receive the employment 

services described in section 235; ‘‘(D) ensuring States fully comply with agreements under section 239; 

‘‘(E) acting as a vigorous advocate for workers applying for assistance 

under this chapter; ‘‘(F) receiving complaints, grievances, and requests for assistance from 

workers under this chapter; ‘‘(G) establishing and overseeing a hotline that workers, employers, and 

other entities may call to obtain information regarding eligibility criteria, 

procedural requirements, and benefits available under this chapter; and 

‘‘(H) carrying out such other duties with respect to this chapter as the 

President may specify for purposes of this section.’’. 

(b) CLERICAL AMENDMENT.—The table of contents for title II of the Trade Act of 

1974 is amended by inserting after the item relating to section 249 the following: 

‘‘Sec. 250. Office of Trade Adjustment Assistance; Deputy Assistant Secretary for Trade Adjustment Assistance.’’. 


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SEC. 165. COLLECTION OF DATA AND REPORTS; INFORMATION TO WORKERS. 

(a) IN GENERAL.—Subchapter C of chapter 2 of title II of the Trade Act of 1974 

(19 U.S.C. 2311 et seq.) is amended by adding at the end the following: 

‘‘SEC. 250A. COLLECTION OF DATA AND REPORTS; INFORMATION TO WORKERS. 

‘‘(a) IN GENERAL.—Not later than 90 days after the date of the enactment of the 

Trade and Globalization Assistance Act of 2007, the Secretary shall implement a 

system to collect and publicly disseminate data on all adversely affected workers 

who apply for or receive adjustment assistance under this chapter. 

‘‘(b) DATA TO BE INCLUDED.—The system required under subsection (a) shall include collection of the following data classified by State, industry, and nationwide 

totals: 

‘‘(1) The number of petitions and number of workers covered by petitions filed, 

certified and denied. 

‘‘(2) The date of filing of each petition and the date of the determination, and 

the average processing time, by year, on petitions. 

‘‘(3) A breakdown, by the claimed cause of dislocation, of petitions denied, 

such as increased imports, shift in production, and other bases for eligibility. 

‘‘(4) A breakdown of the number of certified petitions by the cause of dislocation, such as increase in imports, shift in production, and other causes of eligibility for adjustment assistance. 

‘‘(5) The number of workers participating in any aspect of the adjustment assistance program under this chapter. 

‘‘(6) Reemployment rates and sectors in which dislocated workers have been 

employed after receiving adjustment assistance under this chapter. 

‘‘(7) The type of adjustment assistance received under this chapter, such as 

training or education assistance, reemployment adjustment assistance, cash 

benefits, health coverage, and relocation allowances, the number of workers receiving each type of assistance, and the average duration of time workers receive each type of assistance. 

‘‘(8) The fields of training or education in which workers receiving training 

or education benefits under this chapter are enrolled, the number of workers 

participating in each field, classified by major types of training or education. 

‘‘(9) The number of workers leaving training before completing a course of 

training or education, classified by the cause for early termination. 

‘‘(10) The number of training waivers granted, classified by type of waiver. 

‘‘(11) The wages of workers before separation and any job obtained after receiving benefits under the trade adjustment assistance program under this 

chapter. 

‘‘(12) The average duration of training that was completed. 

‘‘(c) REPORT.—Not later than 16 months after the date of the enactment of the 

Trade and Globalization Assistance Act of 2007, and annually thereafter, the Secretary shall submit to the Committee on Ways and Means of the House of Representatives, the Committee on Finance of the Senate, and any other congressional 

committee of appropriate jurisdiction, a report on whether changes to eligibility requirements, benefits, or training funding under the trade adjustment assistance program under this chapter should be made based on the data collected under subsection (b). 

‘‘(d) AVAILABILITY ON WEBSITE OF THE DEPARTMENT OF LABOR.—The Secretary 

shall make the data collected under subsection (b) publicly available on the website 

of the Department of Labor, in a searchable format, and shall update the data quarterly.’’. 

(b) CLERICAL AMENDMENT.—The table of contents for title II of the Trade Act of 

1974 is amended by inserting after the item relating to section 250 (as added by 

section 163(b) of this Act) the following: 

‘‘Sec. 250A. Collection of data and reports; information to workers.’’. 

SEC. 166. EXTENSION OF TAA PROGRAM. 

(a) FOR WORKERS.—Section 245(a) of the Trade Act of 1974 (19 U.S.C. 2317(a)) 

is amended by striking ‘‘December 31, 2007’’ and inserting ‘‘September 30, 2012’’. 

(b) TERMINATION.—Section 285 of the Trade Act of 1974 (19 U.S.C. 2271 note) is 

amended by striking ‘‘December 31, 2007’’ each place it appears and inserting ‘‘September 30, 2012’’. 

(c) FOR FARMERS.—Section 298(a) of the Trade Act of 1974 (19 U.S.C. 2401g(a)) 

is amended by adding at the end the following: ‘‘There are authorized to be appropriated to the Department of Agriculture not to exceed $81,000,000 for the 9-month 

period beginning on January 1, 2008, and $90,000,000 for each of the fiscal years 

2009 through 2012 to carry out the purposes of this chapter.’’. 


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SEC. 167. JUDICIAL REVIEW. 

Section 284 of the Trade Act of 1974 (19 U.S.C. 2395) is amended— (1) in subsection (a)— (A) by inserting ‘‘or 223A’’ after ‘‘223’’; and 

(B) by striking ‘‘271’’ and inserting ‘‘273’’; 

(2) by amending subsection (b) to read as follows: ‘‘(b) STANDARD OF REVIEW.—The Court of International Trade shall have jurisdiction to review the case as provided in section 706 of title 5, Untied States Code. 

The findings of fact by the Secretary of Labor, the Secretary of Commerce, or the 

Secretary of Agriculture, as the case may be, must be supported by substantial evidence and must be based on a reasonable investigation. The Court of International 

Trade may— ‘‘(1) remand the case to such Secretary to take further evidence; or 

‘‘(2) reverse the action of such Secretary. 

If the case is remanded under paragraph (1), the Secretary concerned may make 

new or modified findings of fact and may modify the Secretary’s previous action, and 

shall certify to the court the record of the further proceedings. The new or modified 

findings of fact must be supported by substantial evidence and must be based on 

a reasonable investigation.’’; and 

(3) in subsection (c), by striking the first sentence. 

SEC. 168. LIBERAL CONSTRUCTION OF CERTIFICATION OF WORKERS AND FIRMS. 

(a) IN GENERAL.—Chapter 5 of title II of the Trade Act of 1974 (19 U.S.C. 2391 

et seq.) is amended by adding at the end the following: 

‘‘SEC. 288. LIBERAL CONSTRUCTION OF CERTIFICATION OF WORKERS AND FIRMS. 

‘‘The provisions of chapter 2 (relating to adjustment assistance for workers) and 

the provisions of chapter 3 (relating to adjustment assistance for firms) shall be liberally construed in favor of certifying workers for assistance under such chapter 2 

and certifying firms for assistance under such chapter 3.’’. (b) CLERICAL AMENDMENT.—The table of contents for title II of the Trade Act of 

1974 is amended by inserting after the item relating to section 287 the following: 

‘‘Sec. 288. Liberal construction of certification of workers and firms.’’. 

TITLE II—TRADE ADJUSTMENT ASSISTANCE 

FOR FIRMS 

SEC. 201. TRADE ADJUSTMENT ASSISTANCE FOR FIRMS. 

(a) IN GENERAL.—Section 251 of the Trade Act of 1974 (19 U.S.C. 2341) is amended— (1) in subsection (a), by inserting ‘‘or service sector firm’’ after ‘‘(including any 

agricultural firm’’; 

(2) in subsection (c)— (A) in paragraph (1)— (i) in the matter preceding subparagraph (A), by inserting ‘‘or service 

sector firm’’ after ‘‘any agricultural firm’’; and 

(ii) in subparagraph (B)— (I) in clause (i), by striking ‘‘, or’’ and inserting a comma; 

(II) in clause (ii)— (aa) by inserting ‘‘or service’’ after ‘‘of an article’’; and 

(bb) by striking ‘‘, and’’ and inserting a comma; and 

(III) by adding at the end the following: ‘‘(iii) sales or production, or both, of the firm, during the period consisting of not more than 36 months preceding the most recent 12-month 

period for which data are available, have decreased absolutely, or ‘‘(iv) sales or production, or both, of an article or service that accounted for not less than 25 percent of the total production or sales of 

the firm during the 36-month period preceding the most recent 12- 

month period for which data are available have decreased absolutely, 

and’’; and 

(B) in the matter preceding subparagraph (A) of paragraph (2) , by striking ‘‘paragraph (1)(C)—’’ and inserting ‘‘paragraph (1)(C):’’; and 

(3) by adding at the end the following: ‘‘(e) BASIS FOR THE DETERMINATION OF THE SECRETARY.— ‘‘(1) INCREASED IMPORTS.—For purposes of subsection (c)(1)(C), the Secretary—

‘‘(A) may use data from any of the preceding three calendar years to determine if the requirements of such subsection have been met; 


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‘‘(B) may determine that increases of imports of like or directly competitive articles or services exist if customers accounting for a significant percentage of the decrease in the sales of the firm certify to the Secretary that 

such customers are obtaining such articles or services from a foreign country; and ‘‘(C) may, in determining whether increased imports of like or directly 

competitive articles or services exist, give special consideration to whether 

it is difficult to demonstrate an increase of such imports if the share of such 

imports relative to production or consumption in the United States of the 

article produced or service provided by the firm concerned is already significant. ‘‘(2) PROCESS AND METHODS FOR OBTAINING CERTIFICATIONS.— ‘‘(A) REQUEST BY PETITIONER.—If requested by a firm, the Secretary shall 

obtain the certifications under paragraph (1)(B) in such manner as the Secretary determines is appropriate. ‘‘(B) PROTECTION OF CONFIDENTIAL INFORMATION.—The Secretary may not 

release information obtained under subparagraph (A) that the Secretary 

considers to be confidential business information unless the party submitting the confidential business information had notice, at the time of submission, that such information would be released by the Secretary, or such 

party subsequently consents to the release of the information. Nothing in 

this subparagraph shall be construed to prohibit a court from requiring the 

submission of such confidential business information to the court in camera. ‘‘(f) NOTIFICATION TO FIRMS OF AVAILABILITY OF BENEFITS.—Upon receiving notice 

from the Secretary of Labor under section 225(c) of the identity of a firm or firms 

that are covered by a certification issued under section 223 or 223A, the Secretary 

of Commerce shall notify such firm or firms of the availability of adjustment assistance under this chapter.’’. (b) DEFINITION.—Section 261 of the Trade Act of 1974 (19 U.S.C. 2351) is amended— (1) by striking ‘‘For purposes of’’ and inserting ‘‘(a) FIRM.—For purposes of’’; 

and 

(2) by adding at the end the following: ‘‘(b) SERVICE SECTOR FIRM.—For purposes of this chapter, the term ‘service sector 

firm’ means a firm engaged in the business of providing services.’’. 

SEC. 202. EXTENSION OF AUTHORIZATION OF TRADE ADJUSTMENT ASSISTANCE FOR FIRMS. 

Section 256(b) of the Trade Act of 1974 (19 U.S.C. 2346(b)) is amended— (1) by striking ‘‘and $4,000,000 for the 3-month period beginning on October 

1, 2007,’’ inserting ‘‘and $50,000,000 for each of fiscal years 2008 through 2012,’’ after ‘‘fiscal years 2003 through 2007,’’; and 

(2) by inserting after the first sentence the following: ‘‘Of the amounts appro- priated pursuant to this subsection for each fiscal year, $350,000 shall be available for full-time positions in the Department of Commerce to administer the 

program under this chapter.’’. 

SEC. 203. INDUSTRY-WIDE PROGRAMS FOR THE DEVELOPMENT OF NEW SERVICES. 

Section 265(a) of the Trade Act of 1974 (19 U.S.C. 2355(a)) is amended— (1) in the first sentence, by striking ‘‘new product development’’ and inserting ‘‘the development of new products and services’’; and 

(2) in the second sentence, by inserting ‘‘, 223A,’’ after ‘‘223’’. 

SEC. 204. DEMONSTRATION PROJECT ON STRATEGIC TRADE TRANSFORMATION ASSISTANCE. 

(a) IN GENERAL.—Chapter 3 of title II of the Trade Act of 1974 (19 U.S.C. 2341 

et seq.) is amended by adding at the end the following: 

‘‘SEC. 266. DEMONSTRATION PROJECT ON STRATEGIC TRADE TRANSFORMATION ASSISTANCE. 

‘‘(a) IN GENERAL.—The Secretary shall conduct a demonstration project (in this 

section referred to as the ‘project’) to demonstrate a programmatic framework that 

will allow small- and medium-sized manufacturers in the United States to gain access to resources that will help them better compete domestically and globally. The 

project should include among its primary goals the following: 

‘‘(1) Expanding the number of firms capable of taking advantage of a trade 

remedy program without drastically increasing the cost of the remedy to the 

taxpayer. 

‘‘(2) Certifying and providing assistance to approximately 700 firms. 

‘‘(3) Integrating the benefits of other applicable government programs into the 

project, and making benefits from the project subject to that integration. 

‘‘(4) Increasing the number of small- and medium-sized firms that export and 

increasing the value of exports from these firms. 


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‘‘(5) Increasing revenues that small- and medium-sized firms derive from 

sales to the Federal Government and State and local governments. ‘‘(6) Expanding technology availability to the small- and medium-sized firm 

segment by increasing access to, and adoption of, the latest technologies being 

developed at Federal laboratories and at universities. ‘‘(7) Improving the business and manufacturing practices of small- and medium-sized firms to enable them to become competitive in a global marketplace. ‘‘(b) ADVISORY BOARD.— ‘‘(1) IN GENERAL.—In carrying out the project, the Secretary shall establish an 

advisory board comprised of representatives described in paragraph (2) to provide advice and recommendations with respect to the establishment and operation of the project. ‘‘(2) REPRESENTATIVES.—Representatives referred to in paragraph (1) shall 

consist of the respective executive directors of each Trade Adjustment Assistance Center affiliated with the trade adjustment assistance for firms program 

under this chapter. ‘‘(c) DURATION.—The Secretary shall conduct the project for the 3-year period beginning on the date that is 180 days after the date of the enactment of this Act. ‘‘(d) ADMINISTRATION OF PROJECT.— In implementing the project, the Secretary 

shall give preference, in entering into contracts for the operation and administration 

of the project, to Trade Adjustment Assistance Centers affiliated with the trade adjustment assistance for firms program under this chapter. 

‘‘(e) REPORT.—The Secretary shall submit to the Congress a report on the project 

under this section not later than 6 months after the date of the completion of the 

project. Such report shall include—

‘‘(1) information on the impact of the project on mitigating the impact of imports in terms of competitiveness; and 

‘‘(2) recommendations on the cost-effectiveness of extending or expanding the 

project. 

‘‘(f) FUNDING.—Of the amounts made available to carry out this chapter for fiscal 

years 2008 through 2012, not more than $1,000,000 for each such fiscal year is authorized to be made available to carry out this section.’’. 

(b) CLERICAL AMENDMENT.—The table of contents for title II of the Trade Act of 

1974 is amended by inserting after the item relating to section 265 the following: 

‘‘Sec. 266. Demonstration project on strategic trade transformation assistance.’’. 

TITLE III—UNEMPLOYMENT INSURANCE 

SEC. 301. SHORT TITLE. 

This title may be cited as the ‘‘Unemployment Insurance Modernization Act’’. 

SEC. 302. SPECIAL TRANSFERS TO STATE ACCOUNTS IN THE UNEMPLOYMENT TRUST FUND. 

(a) IN GENERAL.—Section 903 of the Social Security Act (42 U.S.C. 1103) is 

amended by adding at the end the following: 

‘‘Special Transfers in Fiscal Years 2008 Through 2012 for Modernization 

‘‘(f)(1)(A) In addition to any other amounts, the Secretary of Labor shall provide 

for the making of unemployment compensation modernization incentive payments 

(hereinafter ‘incentive payments’) to the accounts of the States in the Unemployment Trust Fund, by transfer from amounts reserved for that purpose in the Federal unemployment account, in accordance with succeeding provisions of this subsection. 

‘‘(B) The maximum incentive payment allowable under this subsection with respect to any State shall, as determined by the Secretary of Labor, be equal to the 

amount obtained by multiplying $7,000,000,000 times the same ratio as is applicable under subsection (a)(2)(B) for purposes of determining such State’s share of any 

funds to be transferred under subsection (a) as of October 1, 2007. 

‘‘(C) Of the maximum incentive payment determined under subparagraph (B) with 

respect to a State—

‘‘(i) one-third shall be transferred to the account of such State upon a certification under paragraph (4)(B) that the State law of such State meets the requirements of paragraph (2); and 

‘‘(ii) the remainder shall be transferred to the account of such State upon a 

certification under paragraph (4)(B) that the State law of such State meets the 

requirements of paragraph (3). 

‘‘(2) The State law of a State meets the requirements of this paragraph if such 

State law—


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‘‘(A) uses a base period that includes the most recently completed calendar 

quarter before the start of the benefit year for purposes of determining eligibility for unemployment compensation; or ‘‘(B) provides that, in the case of an individual who would not otherwise be 

eligible for unemployment compensation under the State law because of the use 

of a base period that does not include the most recently completed calendar 

quarter before the start of the benefit year, eligibility shall be determined using 

a base period that includes such calendar quarter. ‘‘(3) The State law of a State meets the requirements of this paragraph if such 

State law includes provisions to carry out at least 2 of the following subparagraphs: ‘‘(A) An individual shall not be denied regular unemployment compensation 

under any State law provisions relating to availability for work, active search 

for work, or refusal to accept work, solely because such individual is seeking 

only part-time (and not full-time) work, except that the State law provisions 

carrying out this subparagraph may exclude an individual if a majority of the 

weeks of work in such individual’s base period do not include part-time work. ‘‘(B) An individual shall not be disqualified from regular unemployment compensation for separating from employment if that separation is for compelling 

family reasons. For purposes of this subparagraph, the term ‘compelling family reasons’ includes at least the following: 

‘‘(i) Domestic violence (verified by such reasonable and confidential documentation as the State law may require) which causes the individual reasonably to believe that such individual’s continued employment would jeopardize the safety of the individual or of any member of the individual’s immediate family. 

‘‘(ii) The illness or disability of a member of the individual’s immediate 

family. 

‘‘(iii) The need for the individual to accompany such individual’s spouse—

‘‘(I) to a place from which it is impractical for such individual to commute; and 

‘‘(II) due to a change in location of the spouse’s employment. 

‘‘(C) Weekly unemployment compensation is payable under this subparagraph 

to any individual who is unemployed (as determined under the State unemployment compensation law), has exhausted all rights to regular and (if applicable) 

extended unemployment compensation under the State law, and is enrolled and 

making satisfactory progress in a State-approved training program or in a job 

training program authorized under the Workforce Investment Act of 1998. Such 

program shall prepare individuals who have been separated from a declining occupation, or who have been involuntarily and indefinitely separated from employment as a result of a permanent reduction of operations at the individual’s 

place of employment, for entry into a high-demand occupation. The amount of 

unemployment compensation payable under this subparagraph to an individual 

for a week of unemployment shall be equal to the individual’s average weekly 

benefit amount (including dependents’ allowances) for the most recent benefit 

year, and the total amount of unemployment compensation payable under this 

subparagraph to any individual shall be equal to at least 26 times the individual’s average weekly benefit amount (including dependents’ allowances) for the 

most recent benefit year. 

‘‘(4)(A) Any State seeking an incentive payment under this subsection shall submit an application therefor at such time, in such manner, and complete with such 

information as the Secretary of Labor may by regulation prescribe, including information relating to compliance with the requirements of paragraph (2) or (3), as well 

as how the State intends to use the incentive payment to improve or strengthen the 

State’s unemployment compensation program. The Secretary of Labor shall, within 

90 days after receiving a complete application, notify the State agency of the State 

of the Secretary’s findings with respect to the requirements of paragraph (2) or (3) 

(or both). 

‘‘(B) If the Secretary of Labor finds that the State law provisions (disregarding 

any State law provisions which are not then currently in effect as permanent law 

or which are subject to discontinuation under certain conditions) meet the requirements of paragraph (2) or (3), as the case may be, the Secretary of Labor shall 

thereupon make a certification to that effect to the Secretary of the Treasury, together with a certification as to the amount of the incentive payment to be transferred to the State account pursuant to that finding. The Secretary of the Treasury 

shall make the appropriate transfer within 30 days after receiving such certification. 

‘‘(C)(i) No certification of compliance with the requirements of paragraph (2) or (3) 

may be made with respect to any State whose State law is not otherwise eligible 

for certification under section 303 or approvable under section 3304 of the Federal 

Unemployment Tax Act. 


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‘‘(ii) No certification of compliance with the requirements of paragraph (3) may be 

made with respect to any State whose State law is not in compliance with the requirements of paragraph (2). 

‘‘(iii) No application under subparagraph (A) may be considered if submitted before October 1, 2007, or after the latest date necessary (as specified by the Secretary 

of Labor in regulations) to ensure that all incentive payments under this subsection 

are made before October 1, 2012. 

‘‘(5)(A) Except as provided in subparagraph (B), any amount transferred to the account of a State under this subsection may be used by such State only in the payment of cash benefits to individuals with respect to their unemployment (including 

for dependents’ allowances and for unemployment compensation under paragraph 

(3)(C)), exclusive of expenses of administration. 

‘‘(B) A State may, subject to the same conditions as set forth in subsection (c)(2) 

(excluding subparagraph (B) thereof, and deeming the reference to ‘subsections (a) 

and (b)’ in subparagraph (D) thereof to include this subsection), use any amount 

transferred to the account of such State under this subsection for the administration 

of its unemployment compensation law and public employment offices. 

‘‘(6) Out of any money in the Federal unemployment account not otherwise appropriated, the Secretary of the Treasury shall reserve $7,000,000,000 for incentive 

payments under this subsection. Any amount so reserved shall not be taken into account for purposes of any determination under section 902, 910, or 1203 of the 

amount in the Federal unemployment account as of any given time. Any amount 

so reserved for which the Secretary of the Treasury has not received a certification 

under paragraph (4)(B) by the deadline described in paragraph (4)(C)(iii) shall, upon 

the close of fiscal year 2012, become unrestricted as to use as part of the Federal 

unemployment account. 

‘‘(7) For purposes of this subsection, the terms ‘benefit year’, ‘base period’, and 

‘week’ have the respective meanings given such terms under section 205 of the Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304 

note). 

‘‘Special Transfers in Fiscal Years 2008 Through 2012 for Administration 

‘‘(g)(1) Notwithstanding any other provision of this section, the total amount available for transfer to the accounts of the States pursuant to subsection (a) as of the 

beginning of each of fiscal years 2008, 2009, 2010, 2011, and 2012 shall be equal 

to the total amount which (disregarding this subsection) would otherwise be so 

available, increased by $100,000,000. 

‘‘(2) Each State’s share of any additional amount made available by this subsection shall be determined, certified, and computed in the same manner as described in subsection (a)(2) and shall be subject to the same limitations on transfers 

as described in subsection (b). For purposes of applying subsection (b)(2), the balance of any advances made to a State under section 1201 shall be credited against, 

and operate to reduce (but not below zero)—

‘‘(A) first, any additional amount which, as a result of the enactment of this 

subsection, is to be transferred to the account of such State in a fiscal year; and 

‘‘(B) second, any amount which (disregarding this subsection) is otherwise to 

be transferred to the account of such State pursuant to subsections (a) and (b) 

in such fiscal year. 

‘‘(3) Any additional amount transferred to the account of a State as a result of 

the enactment of this subsection—

‘‘(A) may be used by the State agency of such State only in the payment of 

expenses incurred by it for—

‘‘(i) the administration of the provisions of its State law carrying out the 

purposes of subsection (f)(2) or any subparagraph of subsection (f)(3); 

‘‘(ii) improved outreach to individuals who might be eligible for regular 

unemployment compensation by virtue of any provisions of the State law 

which are described in clause (i); 

‘‘(iii) the improvement of unemployment benefit and unemployment tax 

operations; and 

‘‘(iv) staff-assisted reemployment services for unemployment compensation claimants; and 

‘‘(B) shall be excluded from the application of subsection (c). 

‘‘(4) The total additional amount made available by this subsection in a fiscal year 

shall be taken out of the amounts remaining in the employment security administration account after subtracting the total amount which (disregarding this subsection) is otherwise required to be transferred from such account in such fiscal year 

pursuant to subsections (a) and (b).’’. 


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(b) REGULATIONS.—The Secretary of Labor may prescribe any regulations necessary to carry out the amendment made by subsection (a). 

SEC. 303. EXTENSION OF FUTA TAX. 

Section 3301 of the Internal Revenue Code of 1986 (relating to rate of tax) is 

amended—

(1) by striking ‘‘2007’’ in paragraph (1) and inserting ‘‘2010’’, and 

(2) by striking ‘‘2008’’ in paragraph (2) and inserting ‘‘2011’’. 

SEC. 304. SAFETY NET REVIEW COMMISSION. 

(a) ESTABLISHMENT.—The Secretary of Labor shall establish an advisory commission to be known as the ‘‘Safety Net Review Commission’’ (hereinafter in this section 

referred to as the ‘‘Commission’’). 

(b) FUNCTION.—It shall be the function of the Commission to evaluate the unemployment compensation program, the Trade Adjustment Assistance program, the 

Job Corps program, a program under the Workforce Investment Act, and other employment assistance programs, including the purpose, goals, countercyclical effectiveness, coverage, benefit adequacy, trust fund solvency, funding of State administrative costs, administrative efficiency, and any other aspects of each such program, 

as well as any related provisions of the Internal Revenue Code of 1986, and to make 

recommendations for their improvement. 

(c) MEMBERS.—

(1) IN GENERAL.—The Commission shall consist of 11 members as follows: 

(A) 5 members appointed by the President, to include representatives of 

business, labor, State government, and the public. 

(B) 3 members appointed by the President pro tempore of the Senate, in 

consultation with the Chairman and ranking member of the Committee on 

Finance of the Senate. 

(C) 3 members appointed by the Speaker of the House of Representatives, 

in consultation with the Chairman and ranking member of the Committee 

on Ways and Means of the House of Representatives. 

(2) QUALIFICATIONS.—In appointing members under subparagraphs (B) and 

(C) of paragraph (1), the President pro tempore of the Senate and the Speaker 

of the House of Representatives shall each appoint—

(A) 1 representative of the interests of business, 

(B) 1 representative of the interests of labor, and 

(C) 1 representative of the interests of State governments. 

(3) VACANCIES.—A vacancy in the Commission shall be filled in the manner 

in which the original appointment was made. 

(4) CHAIRMAN.—The President shall appoint the Chairman of the Commission 

from among its members. 

(d) STAFF AND OTHER ASSISTANCE.—

(1) IN GENERAL.—The Commission may engage any technical assistance (including actuarial services) required by the Commission to carry out its functions 

under this section. 

(2) ASSISTANCE FROM SECRETARY OF LABOR.—The Secretary of Labor shall 

provide the Commission with any staff, office facilities, and other assistance, 

and any data prepared by the Department of Labor, required by the Commission to carry out its functions under this section. 

(e) COMPENSATION.—Each member of the Commission—

(1) shall be entitled to receive compensation at the rate of pay for level V of 

the Executive Schedule under section 5316 of title 5, United States Code, for 

each day (including travel time) during which such member is engaged in the 

actual performance of duties vested in the Commission; and 

(2) while engaged in the performance of such duties away from such member’s 

home or regular place of business, shall be allowed travel expenses (including 

per diem in lieu of subsistence) as authorized by section 5703 of such title 5 

for persons in the Government employed intermittently. 

(f) REPORT.—Not later than 6 months after the date of the enactment of this Act, 

the Commission shall submit to the President and the Congress a report setting 

forth the findings and recommendations of the Commission as a result of its evaluation under this section. 

(g) TERMINATION.—The Commission shall terminate 2 months after submitting its 

report pursuant to subsection (f). 


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TITLE IV—MANUFACTURING 

REDEVELOPMENT ZONES 

SEC. 401. MANUFACTURING REDEVELOPMENT ZONES. 

(a) IN GENERAL.—Subchapter Y of chapter 1 of the Internal Revenue Code of 1986 

is amended by adding at the end the following new part: 

‘‘PART III—MANUFACTURING REDEVELOPMENT ZONES 

‘‘Sec. 1400U-1. Designation of manufacturing redevelopment zones. 

‘‘Sec. 1400U-2. Eligibility criteria. 

‘‘Sec. 1400U-3. Manufacturing redevelopment tax credit bonds. 

‘‘Sec. 1400U-4. Tax-exempt manufacturing zone facility bonds. 

‘‘Sec. 1400U-5. Additional low-income housing credits. 

‘‘SEC. 1400U-1. DESIGNATION OF MANUFACTURING REDEVELOPMENT ZONES. 

‘‘(a) IN GENERAL.—From among the areas nominated for designation under this 

section, the Secretary may designate manufacturing redevelopment zones. 

‘‘(b) LIMITATIONS ON DESIGNATIONS.—The Secretary may designate in the aggregate 24 nominated areas as manufacturing redevelopment zones, subject to the 

availability of eligible nominated areas. The Secretary shall designate manufacturing redevelopment zones in such manner that the aggregate population of all 

such zones does not exceed 2,000,000. 

‘‘(c) PERIOD DESIGNATION MAY BE MADE.—A designation may be made under subsection (a) only during the 2-year period beginning on the date of the enactment of 

this section. 

‘‘(d) PERIOD FOR WHICH DESIGNATION IS IN EFFECT.—

‘‘(1) IN GENERAL.—Any designation under this section shall remain in effect 

during the period beginning on the date of the designation and ending on the 

earliest of—

‘‘(A) the close of the 10th calendar year beginning on or after the date 

of the designation, 

‘‘(B) the termination date designated by the State and local governments 

as provided for in their nomination, or 

‘‘(C) the date the Secretary revokes the designation. 

‘‘(2) REVOCATION OF DESIGNATION.—The Secretary may revoke the designation 

under this section of an area if such Secretary determines that the local government or the State in which it is located—

‘‘(A) has modified the boundaries of the area, or 

‘‘(B) is not complying substantially with, or fails to make progress in 

achieving the benchmarks set forth in, the strategic plan included with the 

application 

‘‘(e) LIMITATIONS ON DESIGNATIONS; APPLICATION.—Rules similar to the rules of 

subsections (e) and (f) of section 1391 shall apply for purposes of this section except 

that the rules of such subsection (f) shall be applied with respect to the eligibility 

criteria specified in section 1400U-2. 

‘‘(f) DETERMINATIONS OF POPULATION.—Any determination of population under 

this part shall be made on the basis of the most recent decennial census for which 

data are available. 

‘‘SEC. 1400U-2. ELIGIBILITY CRITERIA. 

‘‘(a) IN GENERAL.—A nominated area shall be eligible for designation under section 1400U-1 only if—

‘‘(1) it meets each of the criteria specified in section 1392(a), 

‘‘(2) the nominated area has experienced a significant decline in the number 

of individuals employed in manufacturing or has a high concentration of abandoned or underutilized manufacturing facilities, and 

‘‘(3) no portion of the nominated area is located in an empowerment zone or 

renewal community, unless the local government which nominated the area 

elects to terminate such designation as an empowerment zone or renewal community. 

‘‘(b) APPLICATION OF CERTAIN RULES; DEFINITIONS.—For purposes of this subchapter—

‘‘(1) rules similar to the rules of subsections (b), (c), and (d) of section 1392 

and paragraphs (4), (7), (8), and (9) of section 1393(a) shall apply, and 

‘‘(2) any term defined in section 1393 shall have the same meaning when used 

in this subchapter. 


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‘‘(c) DISCRETION TO ADJUST REQUIREMENTS.—In determining whether a nominated 

area is eligible for designation as a manufacturing redevelopment zone, the Secretary may, where necessary to carry out the purposes of this part, waive the requirement of section 1392(a)(4) if it is shown that the nominated area has experienced a loss of manufacturing jobs during the previous 20 years which is in excess 

of 25 percent. 

‘‘SEC. 1400U-3. MANUFACTURING REDEVELOPMENT TAX CREDIT BONDS. 

‘‘(a) IN GENERAL.—For purposes of subpart I of part IV of subchapter A (relating 

to qualified tax credit bonds), the term ‘manufacturing redevelopment bond’ means 

any bond issued as part of an issue if—

‘‘(1) 100 percent of the available project proceeds of such issue are to be used 

for one or more qualified manufacturing redevelopment purposes, 

‘‘(2) the bond is not a private activity bond, and 

‘‘(3) the local government which nominated the area to which such bond relates designates such bond for purposes of this section. 

‘‘(b) LIMITATION ON AMOUNT OF BONDS DESIGNATED.—The maximum aggregate 

face amount of bonds which may be designated under subsection (a) with respect 

to any manufacturing redevelopment zone shall not exceed $150,000,000. 

‘‘(c) QUALIFIED MANUFACTURING REDEVELOPMENT PURPOSE.—For purposes of this 

section, the term ‘qualified manufacturing redevelopment purposes’ means capital 

expenditures paid or incurred with respect to property located in a manufacturing 

redevelopment zone for purposes of promoting development or other economic activity in such zone, including expenditures for environmental remediation, improvements to public infrastructure, and construction of public facilities. 

‘‘(d) DEFINITIONS..—For purposes of this section, any term used in this section 

which is also used in section 54A shall have the same meaning given such term by 

section 54A. 

‘‘SEC. 1400U-4. TAX-EXEMPT MANUFACTURING ZONE FACILITY BONDS. 

‘‘(a) IN GENERAL.—For purposes of part IV of subchapter B (relating to tax exemption requirements for State and local bonds), the term ‘exempt facility bond’ includes 

any bond issued as part of an issue if—

‘‘(1) 95 percent or more of the net proceeds (as defined in section 150(a)(3)) 

of such issue are to be used for manufacturing zone property, and 

‘‘(2) the local government which nominated the area to which such bond relates designates such bond for purposes of this section. 

‘‘(b) LIMITATION ON AMOUNT OF BONDS DESIGNATED.—

‘‘(1) IN GENERAL.—The aggregate face amount of bonds which may be designated under subsection (a)(2) with respect to any manufacturing redevelopment zone shall not exceed $230,000,000. 

‘‘(2) CURRENT REFUNDING NOT TAKEN INTO ACCOUNT.—In the case of a refunding (or series of refundings) of a bond designated under this section, the refunding obligation shall be treated as designated under subsection (a)(2) (and shall 

not be taken into account in applying paragraph (1)) if—

‘‘(A) the amount of the refunding bond does not exceed the outstanding 

amount of the refunded bond, and 

‘‘(B) the refunded bond is redeemed not later than 90 days after the date 

of issuance of the refunding bond. 

‘‘(c) LIMITATION ON AMOUNT OF BONDS ALLOCABLE TO ANY PERSON.—

‘‘(1) IN GENERAL.—Subsection (a) shall not apply to any issue if the aggregate 

amount of outstanding manufacturing zone facility bonds allocable to any person (taking into account such issue) exceeds—

‘‘(A) $15,000,000 with respect to any 1 manufacturing redevelopment 

zone, or 

‘‘(B) $20,000,000 with respect to all manufacturing redevelopment zones. 

‘‘(2) AGGREGATE ENTERPRISE ZONE FACILITY BOND BENEFIT.—For purposes of 

paragraph (1), the aggregate amount of outstanding manufacturing zone facility 

bonds allocable to any person shall be determined under rules similar to the 

rules of section 144(a)(10), taking into account only bonds to which subsection 

(a) applies. 

‘‘(d) MANUFACTURING ZONE PROPERTY.—For purposes of this section—

‘‘(1) IN GENERAL.—The term ‘manufacturing zone property’ means any property to which section 168 applies (or would apply but for section 179) if—

‘‘(A) such property was acquired by the taxpayer by purchase (as defined 

in section 179(d)(2)) after the date on which the designation of the manufacturing redevelopment zone took effect, 

‘‘(B) the original use of which in the manufacturing redevelopment zone 

commences with the taxpayer, and 


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‘‘(C) substantially all of the use of which is in the manufacturing redevelopment zone and is in the active conduct of a qualified business by the taxpayer in such zone. 

‘‘(2) QUALIFIED BUSINESS.—The term ‘qualified business’ means any trade or 

business except that—

‘‘(A) the rental to others of real property located in a manufacturing redevelopment zone shall be treated as a qualified business only if the property 

is not residential rental property (as defined in section 168(e)(2)), and 

‘‘(B) such term shall not include any trade or business consisting of the 

operation of any facility described in section 144(c)(6)(B). 

‘‘(3) SPECIAL RULES FOR SUBSTANTIAL RENOVATIONS AND SALE-LEASEBACK.—

Rules similar to the rules of subsections (a)(2) and (b) of section 1397D shall 

apply for purposes of this subsection. 

‘‘(e) NONAPPLICATION OF CERTAIN RULES.—Sections 57(a)(5) (relating to tax-exempt interest), 146 (relating to volume cap), and 147(d) (relating to acquisition of 

existing property not permitted) shall not apply to any manufacturing zone facility 

bond. 

‘‘SEC. 1400U-5. ADDITIONAL LOW-INCOME HOUSING CREDITS. 

‘‘(a) IN GENERAL.—For purposes of section 42, in the case of each calendar year 

during which the designation of a manufacturing redevelopment zone is in effect, 

the State housing credit ceiling of the State which includes such manufacturing redevelopment zone shall be increased by the lesser of—

‘‘(1) the aggregate housing credit dollar amount allocated by the State housing 

credit agency of such State to buildings located in such manufacturing redevelopment zone for such calendar year, or 

‘‘(2) the excess of—

‘‘(A) the manufacturing zone housing amount with respect to such manufacturing redevelopment zone, over 

‘‘(B) the aggregate increases under this subsection with respect to such 

zone for all preceding calendar years. 

‘‘(b) MANUFACTURING ZONE HOUSING AMOUNT.—For purposes of subsection (a), 

the term ‘manufacturing zone housing amount’ means, with respect to any manufacturing redevelopment zone, the product of $20 multiplied by the population of such 

zone. 

‘‘(c) OTHER RULES.—

‘‘(1) CARRYOVERS.—Rules similar to the rules of section 1400N(c)(1)(C) shall 

apply for purposes of this section. 

‘‘(2) RETURNED AMOUNTS.—If any amount of State housing credit ceiling 

which was taken into account under subsection (a)(1) is returned within the 

meaning of section 42(h)(3)(C)(iii)—

‘‘(A) such amount shall not be taken into account under such section, and 

‘‘(B) such allocation shall cease to be treated as an increase under this 

subsection for purposes of subsection (a)(2)(B) until reallocated.’’. 

(b) APPLICATION OF WORK OPPORTUNITY TAX CREDIT TO MANUFACTURING REDEVELOPMENT ZONES.—Subparagraphs (A) and (B) of section 51(d)(5) of such Code are 

each amended by inserting ‘‘manufacturing redevelopment zone,’’ after ‘‘renewal 

community,’’. 

(c) CONFORMING AMENDMENTS RELATED TO MANUFACTURING REDEVELOPMENT TAX

CREDIT BONDS.—

(1) GENERAL RULES.—Part IV of subchapter A of chapter 1 of such Code (relating to credits against tax) is amended by adding at the end the following new 

subpart: 

‘‘Subpart I—Qualified Tax Credit Bonds 

‘‘Sec. 54A. Credit to holders of qualified tax credit bonds. 

‘‘SEC. 54A. CREDIT TO HOLDERS OF QUALIFIED TAX CREDIT BONDS. 

‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds a qualified tax credit bond on 

one or more credit allowance dates of the bond during any taxable year, there shall 

be allowed as a credit against the tax imposed by this chapter for the taxable year 

an amount equal to the sum of the credits determined under subsection (b) with respect to such dates. 

‘‘(b) AMOUNT OF CREDIT.—

‘‘(1) IN GENERAL.—The amount of the credit determined under this subsection 

with respect to any credit allowance date for a qualified tax credit bond is 25 

percent of the annual credit determined with respect to such bond. 


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‘‘(2) ANNUAL CREDIT.—The annual credit determined with respect to any 

qualified tax credit bond is the product of— ‘‘(A) the applicable credit rate, multiplied by 

‘‘(B) the outstanding face amount of the bond. ‘‘(3) APPLICABLE CREDIT RATE.—For purposes of paragraph (2), the applicable 

credit rate is the rate which the Secretary estimates will permit the issuance 

of qualified tax credit bonds with a specified maturity or redemption date without discount and without interest cost to the qualified issuer. The applicable 

credit rate with respect to any qualified tax credit bond shall be determined as 

of the first day on which there is a binding, written contract for the sale or exchange of the bond. ‘‘(4) SPECIAL RULE FOR ISSUANCE AND REDEMPTION.—In the case of a bond 

which is issued during the 3-month period ending on a credit allowance date, 

the amount of the credit determined under this subsection with respect to such 

credit allowance date shall be a ratable portion of the credit otherwise determined based on the portion of the 3-month period during which the bond is outstanding. A similar rule shall apply when the bond is redeemed or matures. ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.— ‘‘(1) IN GENERAL.—The credit allowed under subsection (a) for any taxable 

year shall not exceed the excess of— ‘‘(A) the sum of the regular tax liability (as defined in section 26(b)) plus 

the tax imposed by section 55, over 

‘‘(B) the sum of the credits allowable under this part (other than subpart 

C and this subpart). 

‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the credit allowable under subsection 

(a) exceeds the limitation imposed by paragraph (1) for such taxable year, such 

excess shall be carried to the succeeding taxable year and added to the credit 

allowable under subsection (a) for such taxable year (determined before the application of paragraph (1) for such succeeding taxable year). 

‘‘(d) QUALIFIED TAX CREDIT BOND.—For purposes of this section—

‘‘(1) QUALIFIED TAX CREDIT BOND.—The term ‘qualified tax credit bond’ means 

a manufacturing redevelopment bond (as defined in section 1400U-3) which is 

part of an issue that meets the requirements of paragraphs (2), (3), (4), (5), and 

(6). 

‘‘(2) SPECIAL RULES RELATING TO EXPENDITURES.—

‘‘(A) IN GENERAL.—An issue shall be treated as meeting the requirements 

of this paragraph if, as of the date of issuance, the issuer reasonably expects—

‘‘(i) 100 percent or more of the available project proceeds to be spent 

for 1 or more qualified purposes within the 3-year period beginning on 

such date of issuance, and 

‘‘(ii) a binding commitment with a third party to spend at least 10 

percent of such available project proceeds will be incurred within the 

6-month period beginning on such date of issuance. 

‘‘(B) FAILURE TO SPEND REQUIRED AMOUNT OF BOND PROCEEDS WITHIN 3

YEARS.—

‘‘(i) IN GENERAL.—To the extent that less than 100 percent of the 

available project proceeds of the issue are expended by the close of the 

expenditure period for 1 or more qualified purposes, the issuer shall redeem all of the nonqualified bonds within 90 days after the end of such 

period. For purposes of this paragraph, the amount of the nonqualified 

bonds required to be redeemed shall be determined in the same manner 

as under section 142. 

‘‘(ii) EXPENDITURE PERIOD.—For purposes of this subpart, the term 

‘expenditure period’ means, with respect to any issue, the 3-year period 

beginning on the date of issuance. Such term shall include any extension of such period under clause (iii). 

‘‘(iii) EXTENSION OF PERIOD.—Upon submission of a request prior to 

the expiration of the expenditure period (determined without regard to 

any extension under this clause), the Secretary may extend such period 

if the issuer establishes that the failure to expend the proceeds within 

the original expenditure period is due to reasonable cause and the expenditures for qualified purposes will continue to proceed with due diligence. 

‘‘(C) QUALIFIED PURPOSE.—For purposes of this paragraph, the term 

‘qualified purpose’ means a purpose specified in section 1400U-3(a)(1). 

‘‘(D) REIMBURSEMENT.—For purposes of this subtitle, available project 

proceeds of an issue shall be treated as spent for a qualified purpose if such 

proceeds are used to reimburse the issuer for amounts paid for a qualified 


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purpose after the date that the Secretary makes an allocation of bond limitation with respect to such issue, but only if— ‘‘(i) prior to the payment of the original expenditure, the issuer declared its intent to reimburse such expenditure with the proceeds of a 

qualified tax credit bond, ‘‘(ii) not later than 60 days after payment of the original expenditure, 

the issuer adopts an official intent to reimburse the original expenditure with such proceeds, and ‘‘(iii) the reimbursement is made not later than 18 months after the 

date the original expenditure is paid. ‘‘(3) REPORTING.—An issue shall be treated as meeting the requirements of 

this paragraph if the issuer of qualified tax credit bonds submits reports similar 

to the reports required under section 149(e). ‘‘(4) SPECIAL RULES RELATING TO ARBITRAGE.— ‘‘(A) IN GENERAL.—An issue shall be treated as meeting the requirements 

of this paragraph if the issuer satisfies the requirements of section 148 with 

respect to the proceeds of the issue. ‘‘(B) SPECIAL RULE FOR INVESTMENTS DURING EXPENDITURE PERIOD.—An 

issue shall not be treated as failing to meet the requirements of subparagraph (A) by reason of any investment of available project proceeds during 

the expenditure period. 

‘‘(C) SPECIAL RULE FOR RESERVE FUNDS.—An issue shall not be treated as 

failing to meet the requirements of subparagraph (A) by reason of any fund 

which is expected to be used to repay such issue if—

‘‘(i) such fund is funded at a rate not more rapid than equal annual 

installments, 

‘‘(ii) such fund is funded in a manner that such fund will not exceed 

the amount necessary to repay the issue if invested at the maximum 

rate permitted under clause (iii), and 

‘‘(iii) the yield on such fund is not greater than the discount rate determined under paragraph (5)(B) with respect to the issue. 

‘‘(5) MATURITY LIMITATION.—

‘‘(A) IN GENERAL.—An issue shall not be treated as meeting the requirements of this paragraph if the maturity of any bond which is part of such 

issue exceeds the maximum term determined by the Secretary under subparagraph (B). 

‘‘(B) MAXIMUM TERM.—During each calendar month, the Secretary shall 

determine the maximum term permitted under this paragraph for bonds 

issued during the following calendar month. Such maximum term shall be 

the term which the Secretary estimates will result in the present value of 

the obligation to repay the principal on the bond being equal to 50 percent 

of the face amount of such bond. Such present value shall be determined 

using as a discount rate the average annual interest rate of tax-exempt obligations having a term of 10 years or more which are issued during the 

month. If the term as so determined is not a multiple of a whole year, such 

term shall be rounded to the next highest whole year. 

‘‘(e) OTHER DEFINITIONS.—For purposes of this subchapter—

‘‘(1) CREDIT ALLOWANCE DATE.—The term ‘credit allowance date’ means—

‘‘(A) March 15, 

‘‘(B) June 15, 

‘‘(C) September 15, and 

‘‘(D) December 15. 

Such term includes the last day on which the bond is outstanding. 

‘‘(2) BOND.—The term ‘bond’ includes any obligation. 

‘‘(3) STATE.—The term ‘State’ includes the District of Columbia and any possession of the United States. 

‘‘(4) AVAILABLE PROJECT PROCEEDS.—The term ‘available project proceeds’

means—

‘‘(A) the excess of—

‘‘(i) the proceeds from the sale of an issue, over 

‘‘(ii) the issuance costs financed by the issue (to the extent that such 

costs do not exceed 2 percent of such proceeds), and 

‘‘(B) the proceeds from any investment of the excess described in subparagraph (A). 

‘‘(f) CREDIT TREATED AS INTEREST.—For purposes of this subtitle, the credit determined under subsection (a) shall be treated as interest which is includible in gross 

income. 

‘‘(g) S CORPORATIONS AND PARTNERSHIPS.—In the case of a tax credit bond held 

by an S corporation or partnership, the allocation of the credit allowed by this secVerDate Aug 31 2005 07:39 Oct 30, 2007 Jkt 069006 PO 00000 Frm 00032 Fmt 6659 Sfmt 6621 E:\HR\OC\HR414P1.XXX HR414P1

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tion to the shareholders of such corporation or partners of such partnership shall 

be treated as a distribution. 

‘‘(h) BONDS HELD BY REGULATED INVESTMENT COMPANIES AND REAL ESTATE INVESTMENT TRUSTS.—If any qualified tax credit bond is held by a regulated investment company or a real estate investment trust, the credit determined under subsection (a) shall be allowed to shareholders of such company or beneficiaries of such 

trust (and any gross income included under subsection (f) with respect to such credit 

shall be treated as distributed to such shareholders or beneficiaries) under procedures prescribed by the Secretary.’’. 

(2) REPORTING.—Subsection (d) of section 6049 of such Code (relating to returns regarding payments of interest) is amended by adding at the end the following new paragraph: 

‘‘(9) REPORTING OF CREDIT ON QUALIFIED TAX CREDIT BONDS.—

‘‘(A) IN GENERAL.—For purposes of subsection (a), the term ‘interest’ includes amounts includible in gross income under section 54A and such 

amounts shall be treated as paid on the credit allowance date (as defined 

in section 54A(e)(1)). 

‘‘(B) REPORTING TO CORPORATIONS, ETC.—Except as otherwise provided in 

regulations, in the case of any interest described in subparagraph (A) of 

this paragraph, subsection (b)(4) of this section shall be applied without regard to subparagraphs (A), (H), (I), (J), (K), and (L)(i). 

‘‘(C) REGULATORY AUTHORITY.—The Secretary may prescribe such regulations as are necessary or appropriate to carry out the purposes of this paragraph, including regulations which require more frequent or more detailed 

reporting.’’. 

(3) OTHER CONFORMING AMENDMENTS RELATED TO TAX CREDIT BONDS.—

(A) Sections 54(c)(2) and 1400N(l)(3)(B) of such Code are each amended 

by striking ‘‘subpart C’’ and inserting ‘‘subparts C and I’’. 

(B) Section 1397E(c)(2) of such Code is amended by striking ‘‘subpart H’’

and inserting ‘‘subparts H and I’’. 

(C) Section 6401(b)(1) of such Code is amended by striking ‘‘and H’’ and 

inserting ‘‘H, and I’’. 

(D) The heading of subpart H of part IV of subchapter A of chapter 1 of 

such Code is amended by striking ‘‘Certain Bonds’’ and inserting ‘‘Clean 

Renewable Energy Bonds’’. 

(E) The table of subparts for part IV of subchapter A of chapter 1 of such 

Code is amended by striking the item relating to subpart H and inserting 

the following new items: 

‘‘SUBPART H—NONREFUNDABLE CREDIT TO HOLDERS OF CLEAN RENEWABLE ENERGY BONDS. 

‘‘SUBPART I—QUALIFIED TAX CREDIT BONDS.’’. 

(d) CLERICAL AMENDMENT.—The table of parts for subchapter Y of chapter 1 of 

such Code is amended by adding at the end the following new item: 

‘‘PART III—MANUFACTURING REDEVELOPMENT BONDS’’. 

(e) EFFECTIVE DATE.—

(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years ending after the date 

of the enactment of this Act. 

(2) BOND PROVISIONS.—Sections 1400U-3 and 1400U-4 of the Internal Revenue Code of 1986 (as added by subsection (a)), and the amendments made by 

subsection (c), shall apply to obligations issued after the date of the enactment 

of this Act. 

(3) WORK OPPORTUNITY TAX CREDIT.—The amendments made by subsection (b) 

shall apply to individuals who begin work for the employer after the date of the 

enactment of this Act. 

SEC. 402. DELAY IN APPLICATION OF WORLDWIDE INTEREST ALLOCATION. 

(a) IN GENERAL.—Paragraphs (5)(D) and (6) of section 864(f) of the Internal Revenue Code of 1986 are each amended by striking ‘‘December 31, 2008’’ and inserting 

‘‘December 31, 2011’’. 

(b) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2008. 


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I. SUMMARY AND BACKGROUND 

PURPOSE AND SUMMARY

The bill, H.R. 3920, as amended, contains sections amending the 

Trade Act of 1974 to reauthorize trade adjustment assistance, extending trade adjustment assistance to service workers and firms 

and enhancing the program in a number of other respects, improving the health coverage tax credit established in 2002; creating 

Manufacturing Redevelopment Zones; and modernizing the unemployment insurance system. 

BACKGROUND AND NEED FOR LEGISLATION

Since January 2001, the economy has lost nearly 3 million jobs 

in the manufacturing sector alone. Today, over 7.1 million people 

are unemployed, and nearly 1.3 million of those individuals have 

been unemployed for 6 months or longer. While the U.S. manufacturing sector has been the hardest hit by increased unemployment, 

the service sector has seen declines as some U.S. service jobs move 

to low-cost labor markets, such as China, India, and the Philippines. 

Fixing U.S. trade policy means first and foremost retaining existing jobs and creating new ones by opening foreign markets and establishing a level playing field for U.S. workers, farmers, and businesses. It also means helping those affected by globalization overcome its challenges and succeed. 

Congress created the Trade Adjustment Assistance in 1962 to 

provide U.S. workers who lose their jobs because of foreign competition with government-funded training and associated income 

support to enable them to transition to new, good paying jobs. The 

TAA program has been periodically reauthorized over the last 35 

years, and now includes separate programs for workers, firms, and 

farmers. 

While TAA is supposed to provide assistance to those affected by 

trade and globalization, the program has not kept up with the pace 

of change and fails to meet the needs of those it was intended to 

help. For instance, despite the fact that the service sector employs 

80% of the American workforce and often faces significant foreign 

competition, TAA does not cover most service sector workers, including many information technology workers, accountants, and 

aircraft maintenance crews, all of whom now face substantial competition from abroad. TAA also excludes many manufacturing 

workers because of illogical eligibility criteria (e.g., a worker whose 

factory moves to Mexico is guaranteed TAA coverage, while a worker whose factory moves to China is not). TAA is also inadequately 

funded and, as a result, during periods of economic downturn, eligible dislocated workers are denied access to TAA services. TAA 

training coverage also has been artificially limited by the Department of Labor and some States’ restrictive interpretations of 

present law. The health coverage tax credit, which was heralded as 

a major improvement to the program in 2002, has fundamental 

flaws in its design, and is not being used by the vast majority of 

people eligible for it, despite a clear need to provide access to affordable health care. 


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The bill addresses these and many other problems through a 

complete overhaul of the TAA program. The bill will expand TAA 

coverage to more workers, and improve their training opportunities 

and their health care benefits. Additionally, the bill promotes longneeded reforms to the entryway to TAA, the unemployment insurance system, recognizing that all unemployed workers, and not just 

those whose job loss is attributable to trade and globalization, deserve support in getting back on their feet. Finally, the bill includes 

a package of tax incentives designed to encourage the redevelopment of communities that have suffered substantial reductions in 

manufacturing employment. 

LEGISLATIVE HISTORY

H.R. 3920, a bill to amend the Trade Act of 1974 to reauthorize 

trade adjustment assistance, to extend trade adjustment assistance 

to service workers and firms, and for other purposes was introduced on October 22, 2007, and referred to the House Committee 

on Ways and Means and, in addition, to the Committees on Education and Labor, and Energy and Commerce, for a period to be 

subsequently determined by the Speaker, in each case for consideration of such sections as fall within the jurisdiction of the committee concerned (Both the Committee on Education and Labor and 

the Committee on Energy and Commerce waived their jurisdiction). 

The House Committee on Ways and Means marked up H.R. 3920 

on October 24, 2007, and ordered the bill, as amended, favorably 

reported by a roll call vote, with a quorum present. 

II. EXPLANATION OF THE BILL 

TITLE I—TRADE ADJUSTMENT ASSISTANCE FOR WORKERS 

SUBTITLE A—TRADE ADJUSTMENT ASSISTANCE FOR SERVICE SECTOR

WORKERS; EXPANSION OF COVERED SHIFTS IN PRODUCTION; EXPANSION OF DOWNSTREAM SECONDARY WORKER ELIGIBILITY

(SECS. 101, 102, AND 103 OF THE BILL AND SECS. 221, 222, 223, 

247, 282 OF THE TRADE ACT OF 1974 (‘‘THE ACT’’)) 

Group eligibility 

PRESENT LAW

Present law extends TAA eligibility to workers in a firm or subdivision of a firm where: (1) a significant number of workers from 

the firm (or subdivision) has been totally or partially separated (or 

threatened with such separation); (2) the firm produces ‘‘an article;’’ and (3) there is a connection between the layoffs and trade. 

The trade connection may be shown in one of three ways: (1) that 

increased imports of an article ‘‘like or directly competitive’’ with 

the article produced by the firm ‘‘contributed importantly’’ to both 

layoffs and an absolute decline in production/sales; (2) that the 

workers’ firm shifted production to a U.S. free trade agreement 

partner (e.g., Canada, Mexico, Chile) or regional preference program country (e.g., a beneficiary country eligible for benefits under 

the African Growth and Opportunity Act); or (3) that the workers’

firm shifted production to another country and there has been or 


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is likely to be an increase in imports of a like or directly competitive article from that country. 

Present law extends TAA eligibility to secondary workers (i.e., 

workers employed by an upstream supplier firm or a downstream 

firm to a TAA certified firm). These secondary workers must show 

that they have been adversely affected by the loss of business with 

the TAA certified firm (the primary firm). Unlike workers at upstream supplier firms, workers at downstream firms are covered 

only if the primary firm’s certification is linked to trade with Canada or Mexico (the Canada/Mexico restriction does not apply to 

workers at an upstream supplier firm). 

Present law requires workers at a firm covered by an International Trade Commission (ITC) injury determination in a trade 

remedy case to apply for TAA certification in the same way that 

any other group of workers might. 

EXPLANATION OF THE PROVISION

The provision expands TAA eligibility to service sector workers 

on the same terms as those applied to manufacturing workers (i.e., 

the workers must be employed by a firm where a significant number of workers have been or are threatened with layoff and there 

is a connection between the layoffs and trade). 

The provision includes requirements that effectively limit TAA 

eligibility to those service sector workers affected by trade and 

globalization; specifically, the foreign services must be ‘‘like or directly competitive’’ with U.S. provided services. 

The provision also expands the ‘‘shift in production’’ basis for establishing the connection between layoffs and trade by eliminating 

the requirement that the shift in production be to a U.S. FTA partner (e.g., a North American Free Trade Agreement country) or a 

U.S. regional preference partner (e.g., an AGOA country). Under 

the provision, manufacturing and service sector workers whose 

firm relocates to any foreign country may be eligible for TAA. The 

provision also expands TAA coverage to include workers who lose 

their jobs because their firm obtains ‘‘like or directly competitive’’

articles or services from a firm in another country on a contract 

basis. This is also known as ‘‘offshore outsourcing.’’

The provision also expands TAA coverage to public sector service 

workers. Such workers are eligible for TAA if: (1) a significant 

number of workers within a public sector agency has been laid off 

or threatened with layoff; and (2) the public agency has, or is likely 

to, obtain the services that would have been provided by such 

workers from a foreign country. 

The provision eliminates the requirement for downstream firms 

that the primary firm’s certification be linked to trade with Canada 

or Mexico. The provision also amends the definition of upstream 

supplier and downstream producer to include firms that provide 

services. 

The provision provides for automatic group certification under 

TAA for workers laid off from firms covered by an affirmative injury determination under U.S. anti-dumping, countervailing duty, 

or safeguard laws. 

The provision provides the Secretary of Labor with the authority 

to use several alternative methods for discerning increased imports 

of services, and for establishing that offshoring or offshore 


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outsourcing has occurred. The provision allows the Secretary of 

Labor to rely on the certifications of customers that comprise 20% 

of the firm’s sales to determine that the customers are obtaining 

services from overseas. Similarly, in cases where offshoring or offshore outsourcing of articles or services is alleged, the Secretary 

may rely on information provided by the firm or the public agency 

experiencing the layoff, or customers of the firm in making its eligibility determinations. The Secretary is required to obtain information from the firm or customers when requested by the workers (or 

other entity) petitioning for TAA coverage. The information must 

be kept confidential, but can be viewed in camera by a court. The 

alternative methods are non-exclusive and the Secretary may develop additional methods as well. 

REASONS FOR CHANGE

Most service sector workers presently are ineligible for TAA for 

Workers because of a statutory requirement that the workers must 

have been employed by a firm that produces an ‘‘article.’’ Of the 

800 TAA petitions denied in FY2006, almost half were denied for 

this reason. Most of the denied service-related petitions came from 

two service industries: business services (primarily computer-related) and airport-related services (e.g., aircraft maintenance). In 

April 2006, the Department of Labor issued a regulation expanding 

TAA eligibility to software workers, which partially, but not fully, 

addresses the service worker coverage issue. See GAO Report 07– 702. 

Under present law, a worker whose firm relocates to China is not 

necessarily eligible for TAA; such worker must also show that the 

relocation to China will result in increased exports to the United 

States. In contrast, a worker whose firm relocates to a country with 

which the U.S. has a free trade agreement (e.g., Mexico, Israel, 

Oman) is automatically covered by TAA. The Committee believes 

that this disparate treatment is illogical, and often results in the 

worker whose job was outsourced to China not getting TAA benefits (e.g., where the U.S. factory always served an overseas market, 

the relocation to China would not necessarily result in increased 

imports back to the United States). (Note: production relocation is 

often referred to as ‘‘offshoring.’’) 

Present law also fails to cover workers whose company closes a 

domestic operation, and contracts with a foreign company for the 

goods or services that had been produced here. For example, Airline A laid off a number of its U.S.-based maintenance personnel 

and began using an independent aircraft maintenance company in 

Country B. The laid off Airline A personnel are not covered under 

present law, even though they lost their jobs because of foreign 

competition. 

The Committee also believes that equity requires the TAA eligibility extended to private sector service workers also be extended 

to similarly-situated public sector service workers. 

The Committee believes that present law can lead to disparate 

treatment of workers from firms covered by an International Trade 

Commission injury determination in a trade remedy case (i.e., antidumping, countervailing duty, or safeguard actions). Automatic certification in such cases is appropriate. In these trade remedy cases, 

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jury to a domestic industry, and are looking at the impact of imports on employment in a domestic industry. See e.g., Sec. 771(B) 

and (C) of the Tariff Act of 1930. The ITC’s analysis covers criteria 

similar to those used in determining TAA eligibility and is therefore sufficient for establishing group eligibility under TAA. 

Data on imports, especially imports of services, are not always 

readily available. The Committee therefore believes that the Secretary of Labor should consider alternative methods to show that 

service sector firms are trade-impacted so that they are not unfairly precluded from accessing TAA because of data limitations. 

Similarly, alternatives to current law for meeting offshoring and 

outsourcing eligibility requirements are needed because increased 

imports may not occur as a result of either (i.e., a company that 

offshores its production to Vietnam exports to the Asian market 

and not back to the U.S.). The legislation does not preclude the 

Secretary from using other methods as well. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Determination of the Secretary of Labor 

PRESENT LAW

Existing law makes a worker ineligible for TAA if that worker 

lost his job 6 months prior to the effective date of the subsection. 

The ‘‘effective date’’ at issue is the enactment of the 2002 Trade 

Act. 

EXPLANATION OF PROVISION

The provision strikes the language in existing law making a 

worker ineligible for TAA, if that worker lost his job 6 months prior 

to the effective date of the subsection. 

REASON FOR CHANGE

This is a technical correction. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Monitoring 

PRESENT LAW

Present law requires the Secretaries of Commerce and Labor to 

establish and maintain a program to monitor imports of articles 

into the United States, including: (1) information concerning 

changes in import volume, (2) impacts on domestic production, impacts on domestic employment in industries producing like or competitive products. Summaries must be provided to the Adjustment 

Assistance Coordinating Committee, the U.S. International Trade 

Commission (ITC), and Congress. 

EXPLANATION OF PROVISION

The provision is renamed ‘‘Trade Monitoring and Data Collection.’’ The provision requires the Secretaries of Commerce and 


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Labor to monitor imports of services (in addition to articles). To address data limitations, the provision requires the Secretary of 

Labor to collect data on impacted service workers (by State, industry, and cause). Finally, it requires the Secretary of Commerce, in 

consultation with the Secretary of Labor, to report to Congress on 

ways to improve the timeliness and coverage of data regarding 

trade in services. 

REASON FOR CHANGE

Existing data on trade in services are sparse. Because of the increases in trade in services, the Committee believes that it is critical that the government collect data on imports of services and the 

impact of these imports on U.S. workers. Such information will be 

useful when considering any further refinement of TAA that Congress may contemplate. More generally, the additional data will 

give U.S. businesses and workers insight into trade in services, 

helping them better compete in the global marketplace. Finally, to 

reflect better the nature of the provision, its name is changed. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

SUBTITLE B—INDUSTRY-WIDE TRADE ADJUSTMENT ASSISTANCE

(SECS. 111–114 OF THE BILL AND SECS. 223, 224, 225, 231, OF THE

ACT) 

Industry-wide determinations 

PRESENT LAW

Present law requires workers to seek certification on a firm-firm 

basis; there is no industry-wide certification procedure. 

EXPLANATION OF THE PROVISION

The provision requires the Secretary of Labor to conduct an industry-wide certification investigation when either: (1) three petitions from firms in the same industry are certified within a 6- 

month period; or (2) if the President, or the United States Trade 

Representative, or the House Ways and Means Committee, or the 

Senate Finance Committee requests the Secretary to conduct such 

an investigation. 

The investigation is to determine whether all workers in an industry or alternatively, all workers in an industry within a specific 

geographic region, should be eligible for TAA. Industries are defined using the North American Industry Classification system. 

The Secretary must make an eligibility determination within 60 

days of certifying the third petition or receiving a request/resolution. 

Once a determination is made, the Secretary must identify all 

the firms covered by the determination. All workers of the identified firms are eligible to apply for TAA without the need for any 

additional group eligibility determination. 

Industry-wide certifications must include an impact date, but 

that date cannot be more than a year before the industry-wide investigation request, nor can it be more than a year before the date 

the Secretary certifies the third petition. Workers who lost their 


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jobs before the impact date are ineligible for TAA under the industry-wide certification. 

In the case of affirmative determinations, the Secretary of Labor 

shall notify the Governor(s) of the State(s) in which workers eligible for TAA under the determination are located. 

In the case of a negative determination, the Secretary of Labor 

must notify Committee on Ways and Means and Senate Finance 

Committee of the reasons for the decision. A summary of each industry-wide determination must be promptly published in the Federal Register and on the Website of the Department of Labor, along 

with the reasons underlying the determination. 

The Secretary has the authority to terminate an industry-wide 

determination when the certification is no longer warranted and 

shall have the termination published promptly in the Federal Register and on the Website of the Department of Labor. Workers losing their jobs after the termination date shall not be eligible for 

TAA under the industry-wide certification. 

The Secretary must issue regulations for making industry-wide 

determinations within one year of enactment of the reauthorization 

TAA. 

REASONS FOR CHANGE

The Committee believes that the firm-by-firm certification process can be inefficient, and can lead to delayed and inconsistent results, with some workers who lose their jobs receiving the TAA 

benefits they deserve, while others down the street do not. The industry-wide determination is likely to increase the number of workers eligible for TAA. According to GAO, between 2003 and 2005, 

222 industries—out of 515 industries with at least one TAA certification—met the criteria of 3 petitions certified in 180 days. (GAO 

07–919). The Committee believes that such circumstances justify 

an industry-wide certification mechanism. Because issues have 

been raised with respect to industry-wide certification, including 

what criteria to apply to determine whether an entire industry 

should be certified and how to identify all firms in a certified industry, the Committee believes it is important for the Department 

of Labor to work with the Committee and other stakeholders to develop criteria for industry-wide determinations. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Notifications regarding affirmative determinations and safeguards 

PRESENT LAW

Present law includes a provision requiring the ITC to notify the 

Secretary of Labor when it begins a section 201 global safeguard 

investigation. The Secretary must then begin an investigation of (1) 

the number of workers in the relevant domestic industry and (2) 

whether TAA will help such workers adjust to import competition. 

The Secretary of Labor must submit a report to the President within 15 days of the ITC’s 201 determination. The Secretary’s report 

shall be made public and a summary shall be printed in the Federal Register. 


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EXPLANATION OF THE PROVISION

The provision also instructs the ITC to notify the Secretary of 

Labor and the Secretary of Commerce when it issues an affirmative 

determination of injury/threat thereof under sections 201 or 421 of 

the Trade Act of 1974 or sections 705 or 735 of the Tariff Act of 

1930 and identify all firms that comprise the domestic industry. 

Whenever an injury determination is made, the Secretary of Labor 

must notify employers, workers and unions of firms covered by the 

trade remedy of the workers’ potential eligibility for TAA for Workers and provide them with assistance in filing petitions. Similarly, 

the Secretary of Commerce must notify firms covered by the trade 

remedy of their potential eligibility for TAA for Firms and provide 

them with 7 assistance in filing petitions. Finally, to better reflect 

its nature, as amended, the provision renames the section, ‘‘Notifications Regarding Affirmative Determinations and Safeguards.’’

REASONS FOR CHANGE

A significant hurdle to ensuring that workers and firms avail 

themselves of TAA’s benefits is the lack of awareness about the 

program. In situations like these, where the ITC has made a determination that a domestic industry has been injured as a direct result of trade, giving notice to the workers and firms in that industry of TAA’s potential benefits is warranted. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Restriction on eligibility for program benefits 

PRESENT LAW

Present law precludes an immigrant from receiving unemployment compensation on the basis of work performed, unless the immigrant is an individual who was lawfully admitted for permanent 

residence at the time the work was performed, was lawfully 

present for purposes of performing that work, or was permanently 

residing in the United States under color of law at the time the 

work was performed. Because the unemployment insurance system 

is the requisite gateway to TAA income support eligibility, an immigrant who is ineligible for UI on these grounds necessarily would 

also be ineligible for TAA. 

EXPLANATION OF THE PROVISION

This provision prohibits undocumented workers from receiving 

any TAA benefits, including income support, employment services, 

or training. 

REASONS FOR CHANGE

The Committee believes it is important to affirm undocumented 

workers’ ineligibility for TAA benefits. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 


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SUBTITLE C—PROGRAM BENEFITS (SECS. 121–131 OF THE BILL AND

SECS. 231–237 OF THE ACT) 

Notification of the Secretary of Commerce 

PRESENT LAW

Under present law, the Secretary of Labor must provide workers 

with information about TAA and provide whatever assistance is 

necessary to help petitioners apply for TAA. The Secretary must 

also reach out to State Vocational Education Boards and their 

equivalent agencies, as well as other public and private institutions, about affirmative group certification determinations and projections of training needs. 

The Secretary must also notify each worker who the State has 

reason to believe is covered by a group certification in writing via 

U.S. Mail of the benefits available under TAA. If the worker lost 

his job before group certification, then the notice occurs at the time 

of certification. If the worker lost her job after group certification, 

then the notice occurs at the time the worker loses her job. The 

Secretary must also publish notice in the newspapers circulating in 

the area where the workers reside. 

EXPLANATION OF PROVISION

The provision requires the Secretary of Labor, upon issuing a 

certification (including an industry-wide certification), to notify the 

Secretary of Commerce of the identity of the firms covered by a certification. 

REASON FOR CHANGE

Firms employing workers certified as eligible for TAA benefits 

may not be aware that they may be eligible for assistance under 

the TAA for Firms program. Requiring the Secretary of Labor to 

notify the Secretary of Commerce when workers at a firm are certified as TAA eligible will help put these firms on notice of their 

potential TAA for Firms eligibility. This issue arose during informal discussions between the Committee and the Department of 

Commerce, which administers the TAA for Firms program. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Qualifying requirements for workers 

PRESENT LAW

Present law authorizes a worker to receive TAA income support 

(known as ‘‘Trade Readjustment Allowance’’ or ‘‘TRA’’) for weeks of 

unemployment that begin 60 days after the date of filing the petition on which certification was granted. 

To qualify for TAA benefits, a worker must have: (1) lost his job 

on or after the trade impact date identified in the certification; and 

within two years of the date of the certification determination; (2) 

been employed by the TAA certified firm for at least 26 of the 52 

weeks preceding the layoff; and (3) earned at least $30 or more a 

week in that employment. 


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A worker must qualify for, and exhaust, his State unemployment 

compensation (UC) benefits before receiving a weekly TRA. 

Further, to receive TRA, a worker must be enrolled in an approved training program by the later of: 8 weeks after the TAA petition was certified, or 16 weeks after job loss (the ‘‘8/16’’ deadline). 

The ‘‘8/16’’ deadline can be extended in certain limited circumstances. Workers may also receive limited waivers of the ‘‘8/16’’

training enrollment deadline. 

Current law provides for waivers in circumstances: (1) the worker has been or will be recalled by the firm; (2) the worker possesses 

marketable skills; (3) the worker is within 2 years of retirement; 

(4) the worker cannot participate in training because of health reasons; (5) training enrollment is unavailable; or (6) training is not 

reasonably available to the worker (nothing suitable, no reasonable 

cost, no training funds). 

Waivers last 6 months, unless the Secretary determines otherwise, and will be revoked if the basis for the waiver no longer exists. States have the authority to issue waivers. By regulation, 

State and local agencies must ‘‘review’’ the waivers every thirty 

days. 

If a worker failed to begin training or has stopped participating 

in training without justifiable cause or if the worker’s waiver is revoked, the worker will receive no income support until the worker 

begins or resumes training. 

EXPLANATION OF PROVISION

The provision amends existing law to change the date on which 

a worker can receive TAA income support from 60 days from the 

date of the petition to the date of certification. 

The provision strikes the ‘‘8/16’’ rule and extends the deadline for 

trade-impacted workers. If a worker lost his job before the certification, then the worker has 26 weeks from the date of certification 

to enroll in training. If the worker lost his job after certification, 

he has 26 weeks from the date he lost his job to enroll in training. 

The provision also gives the Secretary the authority to waive the 

new 26 week training enrollment deadline if a worker was not 

given timely notice of the deadline. 

The provision clarifies that the ‘‘marketable skills’’ training waiver may apply to workers who have post-graduate degrees from accredited institutions of higher education, such as universities covered under section 101(a) of the Higher Education Act. 

The provision requires the Secretary to authorize States to issue 

limited training waivers. It also amends the waiver length rules 

and stipulates that such waivers last for 3 months, but that States 

may renew them for an additional 3 months, if needed. 

It requires that all determinations of eligibility for TAA should 

be made by State employees appointed on a merit basis. 

REASON FOR CHANGE

The Committee believes that the 60-day rule makes little sense 

and leads to the following scenario: a worker laid off well before 

certification could exhaust his unemployment insurance and yet 

have to wait to receive the trade readjustment assistance to which 

the worker was otherwise entitled. 


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The Government Accountability Office, the Department of Labor, 

the States, and workers’ advocacy groups have criticized the 8/16 

deadline as being too short. First, these deadlines often occur while 

the worker is still on traditional UI (most workers receive up to 26 

weeks of State UI compensation). During those 26 weeks, most 

workers are actively engaged in a job search and are not focused 

on retraining. Forcing workers to enroll in training at such an 

early stage can discourage active job search. Second, typically, a 

worker decides to consider training only after an extended period 

of unsuccessful job searching. Under present law, workers are only 

beginning to consider training options close to the 8/16 deadline, 

and often make hurried decisions about training merely to preserve 

their TAA eligibility. Third, when large numbers of certified workers are laid off all at once, it can be difficult for TAA administrators to perform adequate training assessments and meet the 8/16 

deadline. See GAO Report 04–1012. 

While recognizing the necessity of waivers in certain circumstances, some States have complained that the sheer volume of 

waivers that needs to be processed is burdensome. For example, according to GAO, 59,375 waivers were issued in 2005 (and 60,948 

in 2004). The Committee believes that providing a longer length of 

time for the waivers, along with the extension of the training enrollment deadline, will reduce the number of waivers and should 

ease the associated administrative burden. 

When a worker has failed to meet the training enrollment deadline through no fault of his own, the Committee believes that there 

should be redress. Under present law, there is none. The Department of Labor has acknowledged that this is a problem. 

The Committee believes that merit-based State employees should 

make decisions about individual worker TAA eligibility because 

such decisions rest largely on whether the worker is eligible for unemployment insurance (UI) and basic UI eligibility determinations 

are made by State Employment Security Agency (ESA) merit staff. 

This provision also affirms the importance of ESAs in delivering 

these federal benefits as well as the historical connection between 

UI, Wagner-Peyser Employment Services, and TAA. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Weekly amounts; Limitations on trade readjustment allowances, allowances for extended training and breaks in training 

PRESENT LAW

TRA is the income support that workers receive weekly. It is 

equal to the worker’s weekly UI benefit. TRA is divided into two 

main periods: ‘‘Basic TRA’’ and ‘‘Additional TRA.’’

Basic TRA is available for 52 weeks minus the number of weeks 

of unemployment insurance for which the worker was eligible (usually 26 weeks). Basic TRA must be used within 104 weeks after the 

worker lost his job (130 weeks for workers requiring remedial 

training). Any Basic TRA not used in that period is forgone. 

Additional TRA is available for up to 52 more weeks if the worker is enrolled in and participating in training. The worker receives 

Additional TRA only for weeks in training. A worker on an apVerDate Aug 31 2005 07:39 Oct 30, 2007 Jkt 069006 PO 00000 Frm 00044 Fmt 6659 Sfmt 6602 E:\HR\OC\HR414P1.XXX HR414P1

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proved break in training of 30 days or less is considered to be participating in training and therefore eligible for TRA during that period. Additional TRA must otherwise be used over a consecutive period (e.g., 52 consecutive weeks). 

Participation in remedial training makes a worker eligible for up 

to 26 more weeks of TRA. 

Under present law, because of how State UI laws operate, workers in training and working part-time run the risk of resetting 

their UI benefits (and their TRA benefit) at the lower part-time 

level which would leave them with insufficient income support to 

continue with training. 

Under present law, a worker is not eligible for additional TRA 

payment if the worker has not applied for training 210 days from 

certification or job loss, which ever is later. 

EXPLANATION OF PROVISION

The provision amends existing law to: (1) disregard, for purposes 

of determining a worker’s weekly trade readjustment allowance 

amount, earnings where the worker is working part-time and participating in full-time training; and (2) ensure that workers will retain the amount of income support provided initially under TRA 

even if a new UI benefit period (with a lower weekly amount) is 

established due to the worker obtaining part-time or short-term 

full-time employment. 

The provision also increases the number of weeks a worker can 

receive additional TRA from 52 to 78 and expands the time in 

which a worker can receive Additional TRA from 52 weeks to 91 

weeks. 

The provision states that periods during which an administrative 

or judicial appeal of a negative determination will not be counted 

when calculating a worker’s eligibility for TRA. Moreover, the provision also grants justifiable cause authority to the Secretary to extend certain applicable deadlines concerning receipt of Basic and 

Additional TRA. Justifiable cause may include a worker’s failure to 

receive timely information, delays in certification associated with 

appeals, and justifiable breaks in training (e.g., health problems). 

The provision also strikes the 210 day rule, which mandates that 

a worker is not eligible for additional TRA payment if the worker 

has not applied for training 210 days from certification or job loss, 

whichever is later. 

REASON FOR CHANGE

The Committee believes that the disincentive to combining fulltime training and part-time work needs to be removed so that 

workers who might not otherwise be in training, but for the additional income they earn working part-time are not excluded from 

the program. 

The Committee extended the period of Additional TRA to promote longer-term training. The Committee notes that many popular and effective training programs for high-demand occupations, 

such as nursing, require 2–4 years to complete, at a minimum. 

More time is required if remedial or prerequisite classes are necessary. As such, the Committee believes that the present amount 

of income support is inadequate to allow workers to complete valuable training programs, such as nursing, which are likely to lead 


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to re-employment at good wages. In addition, because the enrollment deadline has been extended to 26 weeks, this change ensures 

that workers actively engaged in a job search are not penalized 

subsequently when they enter training. The Committee notes that 

the additional 26 weeks, and all Additional TRA, are provided only 

if the worker is in training (and thus in need of the extended income support to complete training). 

The Committee believes that the 30-day limitation on breaks in 

training lacks needed flexibility and may preclude workers from 

participating in the most suitable training and completing that 

training. By allowing for expanded breaks, workers will have more 

training options, including completion of a degree at a college or 

university that has a three to four month summer break, as many 

do. It also ensures that health problems and family emergencies requiring a break in training do not unfairly preclude an enrollee 

from completing that training. 

The Committee believes that tolling of deadlines is necessary; 

otherwise judicial relief obtained from a successful court challenge 

would be meaningless, as the decision of the court will inevitably 

take place after the TAA program eligibility deadlines have passed. 

The Department of Labor provides for similar tolling in its present 

and proposed regulations. 

Similarly, the Committee believes that affording the Secretary 

flexibility in instances where a worker is ineligible through no fault 

of her own is consistent with the spirit of the program and will 

help ensure workers get the retraining they need to secure good 

paying jobs. 

The 210 day deadline is a left over NAFTA–TAA rule and has 

no operative effect, given the 8/16 deadline and the requirement 

that a worker be in training to receive additional TRA. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Application of State laws and regulations on good cause for waiver 

of time limits or late filing of claims. 

PRESENT LAW

A State’s unemployment insurance laws apply to a worker’s 

claims for TRA. 

EXPLANATION OF PROVISION

The provision makes a State’s ‘‘good cause’’ law applicable when 

the State is making determinations concerning a worker’s claim for 

TRA or other adjustment assistance. 

REASON FOR CHANGE

Most States have ‘‘good cause’’ laws allowing the waiver of a statutory deadline when the deadline was missed solely because of 

agency error. These good cause laws apply to administration of 

State UI laws. The Department of Labor, by regulation, has precluded application of State good cause laws to TAA. This prohibition unjustifiably penalizes workers who miss a deadline through 

no fault of their own. 


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EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Employment and case management services 

PRESENT LAW

Present law requires the Secretary of Labor to make ‘‘every reasonable effort’’ to secure services for affected workers covered by a 

certification including ‘‘counseling, testing, and placement services’’

and ‘‘[s]upportive and other services provided for under any other 

Federal law,’’ including WIA one-stop services. Typically, the Secretary provides these services through agreements with the States. 

EXPLANATION OF PROVISION

This provision requires the Secretary and the States to, among 

other things: (1) perform comprehensive and specialized assessments of enrollees’ skill levels and needs; and (2) develop individual employment plans for each impacted worker and provide enrollees with (a) information on available training, (b) information 

on individual counseling to determine which training is suitable, 

and (c) information on how to apply for such training. The provision also requires the Department of Labor and the States to provide TAA program participants with short-term prevocational services and individual career counseling before, during, and after they 

obtain new jobs. 

REASON FOR CHANGE

Present law does not define the level of employment or case management services to be provided to TAA eligible workers, nor does 

it require that those services be delivered to them. Moreover, 

present law does not provide sufficient funding to provide TAA eligible workers with adequate case management. As a result, States 

are relying on overly-stretched Wagner-Peyser funds to provide 

case management. States are also co-enrolling TAA workers in 

WIA, which can lead to TAA covered workers not receiving the benefits for which they are eligible. (WIA focuses on rapid reemployment and short-term training.) By defining in detail the type of employment and case management services to which TAA workers are 

entitled and mandating that Department of Labor provide these 

services (and by providing more funding to help cover the cost of 

providing them, see infra), these problems can be addressed. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Training 

PRESENT LAW

Under present law, the Secretary shall approve training if: (1) 

there is no suitable employment; (2) the worker would benefit from 

appropriate training; (3) there is a reasonable expectation of employment following training (although not necessarily immediately 

available employment); (4) the approved training is reasonably 

available to the worker; (5) the worker is qualified for the training; 


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and (6) training is suitable and available at a reasonable cost. ‘‘Insofar as possible,’’ the Secretary is supposed to ensure the provision 

of training on the job. Training will be paid for directly by the Secretary or using vouchers. The total amount of training funding is $220,000,000. During the 

year, if the Secretary determines that there is inadequate funding 

to meet the demand for training, the Secretary has the authority 

to decide how to apportion the remaining funds to the States. 

Based on internal department policy, at the beginning of each fiscal year, the Department of Labor allocates 75% of the training 

funds to States based on each State’s training expenditures and the 

average number of training participants over the previous 21⁄2

years. The previous year’s allocation serves as a floor. The Department of Labor also has a ‘‘hold harmless’’ policy that ensures that 

each State’s initial allocation can be no less than 85% of its previous year’s initial allocation. The Department of Labor holds the 

remaining 25% in reserve to distribute to States throughout the 

year according to need; most of the funds are disbursed on the last 

day of the fiscal year. States have 3 years to spend their federal 

funds. If the funds are not spent, the money reverts back to the 

General Treasury. 

If the costs of a worker’s training are paid for by the Secretary 

under TAA, no other federal program may pay for the training. 

Similarly, the Secretary cannot pay for training if another federal 

program has paid for the training or if the training expenses are 

reimbursable under federal law, and a portion of the costs have already been paid pursuant to that law. But funds paid under another federal program that do not directly cover the costs incurred 

in training a worker, even if they indirectly reduce the overall costs 

involved, do not preclude the Secretary from paying for training 

under TAA. Current law allows some cost sharing between federal 

government programs, and the federal government and other nonfederal sources. 

EXPLANATION OF PROVISION

The provision strikes the obsolete requirement that the Secretary 

of Labor shall ‘‘assure the provision’’ of on the job training. 

The provision lifts the Department of Labor prohibition on TAA 

participants using personal resources to fund training programs 

that extend beyond normal program eligibility. 

The provision increases the training cap from $220,000,000 to 

$440,000,000 in FY2008 and FY2009, and increases the cap to 

$660,000,000 in FY2010. 

The provision requires that the Secretary develop a new allocation formula for dividing federal training funds among the States 

within 120 days of enactment. The Committee and the Senate Finance Committee must be consulted at least 60 days before the 

new formula is implemented. 

In developing the new allocation formula, the Secretary must 

consider a broad range of factors when making distributions, including: (1) the number of workers certified in the previous year; 

the number of workers enrolled in training; (2) the minimum level 

of funding needed to provide approved training; (3) WARN and 

other layoff notifications; and (3) tying the non-initial distributions 

of training funds to whether the State requested such funds. 


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The provision also directs the Secretary of Labor to provide for 

multiple disbursements of funds and ensure that the final distribution of the fiscal year is before July 1 and, if necessary, develop a 

system for recapture and redistribution of unused training funds. 

The provision also instructs GAO to study the new allocation procedures and issue an interim report reviewing the first fiscal year 

the procedures are implemented and a final report reviewing the 

first three fiscal years the new procedures are in effect. 

REASON FOR CHANGE

The Committee believes that while on the job training (‘‘OJT’’) is 

an option that workers should be able to take advantage of, it 

should not be the Secretary’s default training placement. Moreover, 

the Department of Labor has stated that it does not endeavor to 

provide OJT ‘‘[i]nsofar as possible.’’ Prohibiting TAA participants from contributing to the costs of 

their training precludes workers from enrolling in courses that may 

extend beyond the normal 2-year period covered by TAA. The Committee believes that lifting this prohibition is needed to broaden 

workers’ training options. However, States should not use this new 

rule to reduce the amount of funds that the States will provide a 

worker for training, nor to obligate workers to contribute funds towards their training. 

The Committee believes that the training cap needs to be increased for two reasons. First, more funding is needed to cover the 

expanded group of TAA eligible workers because of changes made 

elsewhere in the bill (e.g., coverage of service workers, more manufacturing workers). Second, during high periods of TAA usage, the 

existing training funding is not sufficient. States have, at times, 

run out of training funds, resulting in some States freezing enrollment of eligible workers in training (See GAO–04–1012). 

As the GAO has documented, there are significant problems with 

the Department of Labor’s method of allocating training funds. The 

primary problem is that the Department of Labor’s method of allocation appears to result in insufficient funds for some States. This 

appears to be occurring because of the Department of Labor’s reliance on historical usage and a ‘‘hold harmless’’ policy. In particular, 

States that were experiencing heavy layoffs at the time the initial 

allocation formula was implemented may no longer be experiencing 

layoffs at the same rate, but still receive significant allocations 

from the Department of Labor. In contrast, a State 15 experiencing 

relatively few layoffs several years ago may now have far greater 

numbers of layoffs, but still receives a limited amount in its distribution. In short, the allocation that States receive at the beginning of the fiscal year does not reflect States’ present demand for 

training services. Misallocation of training funds among States also 

appears to be exacerbated by the Department of Labor’s practice of 

holding back a significant amount of training funds and distributing the balance on the last day of the fiscal year, without regard 

to need (i.e., the Department of Labor distributes end of the year 

money to all States, even those that have spent less than 1% of the 

present fiscal year’s allocation). 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 


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Prerequisite education, approved training programs 

PRESENT LAW

Approvable training includes: employer-based training (on the job 

training/customized training); training approved under the Workforce Investment Act of 1998; training approved by a private industry council; any remedial education program; any training program 

whose costs are paid by another federal or State program; and any 

other program approved by the Secretary. Additionally, remedial 

training is approvable and participation in such training makes a 

worker eligible for up to 26 more weeks of TAA-related income support. 

EXPLANATION OF PROVISION

The provision clarifies that existing law allows training funds to 

be used to pay for training at an accredited institution of higher 

education, such as those covered by 101(a) of the Higher Education 

Act, including training to obtain or complete a degree or certification program (where completion of the degree or certification can 

be reasonably expected to result in employment). 

The provision also offers up to an additional 26 weeks of income 

support while workers take prerequisite classes necessary to enter 

training. However, a worker who has received additional income 

support while participating in remedial training is ineligible for 

this income support while participating in prerequisite training. 

REASON FOR CHANGE

Present law does not explicitly state whether TAA training funds 

may be used to obtain a college or advanced degree. Some States 

have interpreted this silence to preclude enrollment in a two-year 

community college or four-year college or university as a training 

option, even where a TAA participant was working towards completion of a degree prior to being laid off. So, some workers have been 

denied use of training funds at institutions of higher education (as 

defined in section 101(a) of the Higher Education Act of 1965). The 

Committee believes that States should be encouraged to approve 

the use of training funds by TAA enrollees to obtain a college or 

advanced degree, including degrees offered at two-year community 

colleges and four-year colleges or universities. 

While a worker can obtain additional income support while participating in remedial training, there is no corollary support for 

workers participating in prerequisite training (e.g., individuals enrolling in nursing usually need basic science prerequisites, which 

are not considered qualifying remedial training). States have requested providing additional income support for workers who participate in prerequisite training. 

The Committee also believes that while WIA-approved training is 

an approvable TAA training option, it should not be the only one 

that TAA enrollees are authorized to pursue. The Committee is 

concerned that some States have restricted training opportunities 

to those approved under WIA. According to the Congressional Research Service, many community colleges, for instance, do not get 

WIA certification because of its costly reporting requirements. To 

limit TAA training opportunities in this way unacceptably curbs 


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the scope of training that TAA enrollees might elect to participate 

in and potentially impairs their ability to get retrained and reemployed. 

The provision does not, however, prohibit States from approving 

training. In fact, the Committee believes that States should closely 

evaluate training programs and institutions to ensure federal funds 

are well spent. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Eligibility for unemployment insurance and program benefits while 

in training 

PRESENT LAW

Current law states that a worker may not be deemed ineligible 

for UI (and thus, TAA), if they are in training or leave unsuitable 

work to enter training. 

Other than stating that on the job training is approvable TAA 

training, there is nothing in current law setting forth the rules and 

requirements concerning such training. 

EXPLANATION OF PROVISION

The provision states that a worker will not be ineligible for UI 

or TAA if the worker: (1) is in training, even if the worker does not 

meet the requirements of availability for work, active work search, 

or refusal to accept work under Federal and State UI law; or (2) 

leaves work to participate in training, including temporary work 

during a break in training. 

The provision also reinforces the fact that OJT needs to be suitable OJT: OJT reasonably expected to lead to employment, that is 

compatible with the workers’ skills, and that includes a State-certified benchmark-based curriculum. 

REASON FOR CHANGE

The Committee is concerned that confusion in present UI law 

surrounding a worker’s decision to quit work to enter training and 

the ramifications of that decision from a UI eligibility perspective 

may preclude a worker from being able to participate in TAA training. 

The Committee is also concerned that present law lacks adequate 

guidelines making it clear that OJT must be suitable to qualify 

under TAA and thus the OJT option is vulnerable to abuse by employers interested in the payment they receive and little else. As 

a result, some OJT experiences have left workers with inadequate 

training and skills to obtain good paying reemployment. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Administrative costs and case management funding 

PRESENT LAW

Present law does not provide for separate funding for States to 

administer TAA. However, the Department of Labor and Congress 


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have customarily provided States with administrative funds equal 

to 15% of the training allocation they receive. 

EXPLANATION OF PROVISION

The provision codifies the present practice and authorizes that 

each State receive funds equal to 15% of its training funding allocation to cover administrative expenses, including the processing of 

waivers and the collection of data, and for providing case management and employment services. The provision also provides an additional amount of funding to each State that is equal to .06% of 

the total training cap (e.g., $440,000,000 in 2008) for case management and employment services. 

The provision requires that funds provided to cover administrative expenses in excess of the amount provided in FY2007 as well 

as the .06% payment must be administered by merit based staff. 

The Committee believes that the latter stream of funding should be 

in addition to, and not offset, any funds that the State would otherwise receive under WIA or any other program. 

REASON FOR CHANGE

States incur costs to administer the TAA program, including for 

processing applications and providing employment and case management services. While appropriators provide these funds out of 

custom, the Committee believes that this practice should be codified. 

The Committee believes that these funds have not been enough 

to ensure that there are adequate TAA human resources in place 

to provide affected workers with the employment and case management services they are entitled to and deserve. To bolster the TAA 

case management and employment services, the Committee believes that additional funding is needed. Moreover, to give States 

the predictability they need to make staffing decisions, it should be 

a fixed amount, disconnected from the training allocation each 

State gets. 

The Committee directed that new funding under this provision 

be dedicated to State merit staff. That requirement is intended to 

shore up the State ESAs that traditionally have administered TAA. 

Restoring the administration of TAA to ESAs is important to ensure that TAA funds are leveraged with other funds provided to 

ESAs, including under the Wagner Peyser Act, and to maintain the 

important programmatic connections between TAA and the unemployment insurance and employment services programs. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Job search and relocation allowances 

PRESENT LAW

The Secretary may grant an application for a job search allowance where: (1) the allowance will help the totally separated worker find a job in the United States; (2) local employment is not available; (3) the application is filed by the later of (a) 1 year from separation, (b) 1 year from certification, or (c) 6 months after completing training (unless the worker received a waiver). A worker 


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1Pub. L. No. 107–210 (2002). 

may be reimbursed for 90% of his job search costs, up to $1,250. 

Allowances for subsistence and transportation must conform to 

those allowed under Sec. 236(b)(1) and (2). 

The Secretary may grant an application for relocation allowance 

where: (1) the allowance will assist a totally separated worker relocate within the United States; (2) local employment is not available; (3) the affected worker has no job at the time of relocation; 

(4) the worker has found suitable employment that should be of 

long-term duration; (5) has a bona fide offer of employment; (6) 

filed the application the later of (a) 425 days from separation, (b) 

425 days from certification, or (c) 6 months after completing training (unless the worker received a waiver). A worker may be reimbursed for 90% of his relocation costs, up to $1,250. 

EXPLANATION OF PROVISION

The provision reimburses 100% of a worker’s job search expenses, 

up to $1500, and 100% of a worker’s relocation expenses, up to 

$1500. It also strikes the exception in existing law precluding a 

worker who received a waiver from job search allowance and relocation allowance eligibility. 

REASON FOR CHANGE

The Committee believes that the job search and relocation allowances need to be increased to reflect the cost of inflation and the 

cost and difficulty a worker faces when looking for work and taking 

a job outside the worker’s local community. 

The Committee believes that the waiver eligibility exception was 

unintentionally included with the 2002 amendments to TAA. It is 

an unduly harsh rule; a worker who receives a waiver should still 

be eligible for these allowances, so that the worker can obtain assistance needed to get re-trained and re-employed in good paying 

jobs. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

SUBTITLE D—HEALTH CARE PROVISIONS (SECS. 141 OF THE BILL

AND SECS. 35, 7527, AND 9801 OF THE INTERNAL REVENUE CODE

OF 1986; SECS. 172, 173 OF THE WORKFORCE INVESTMENT ACT OF

1998; SEC. 701 OF THE EMPLOYEE RETIREMENT INCOME SECURITY

ACT OF 1974, AND SEC. 2701 OF THE PUBLIC HEALTH SERVICE

ACT) 

Modify the Health Coverage Tax Credit 

PRESENT LAW

In general 

The Trade Act of 2002 1 established a refundable tax credit that 

pays 65 percent of the cost of qualified health insurance premiums 

for eligible individuals and their spouse and dependents. The credit, commonly referred to as the health coverage tax credit 

(‘‘HCTC’’), is available on an advance basis. 


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2 An eligible month must begin after November 4, 2002. This date is 90 days after the date 

of enactment of the Trade Act of 2002, which was August 6, 2002. 3Part I of subchapter B, or subchapter D, of chapter 2 of title II of the Trade Act of 1974. 

Among other requirements, payment of a trade readjustment allowance is conditioned upon the 

individual enrolling in certain training programs or receiving a waiver of training requirements. 4 Excepted benefits are: (1) coverage only for accident or disability income or any combination 

thereof; (2) coverage issued as a supplement to liability insurance; (3) liability insurance, including general liability insurance and automobile liability insurance; (4) worker’s compensation or 

similar insurance; (5) automobile medical payment insurance; (6) credit-only insurance; (7) coverage for on-site medical clinics; (8) other insurance coverage similar to the coverages in (1)– (7) specified in regulations under which benefits for medical care are secondary or incidental 

to other insurance benefits; (9) limited scope dental or vision benefits; (10) benefits for long-term 

care, nursing home care, home health care, community-based care, or any combination thereof; 

and (11) other benefits similar to those in (9) and (10) as specified in regulations; (12) coverage 

only for a specified disease or illness; (13) hospital indemnity or other fixed indemnity insurance; and (14) Medicare supplemental insurance. 5 An amount is considered paid by the employer if it is excludable from income. Thus, for example, amounts paid for health coverage on a salary reduction basis under an employer plan 

are considered paid by the employer. A rule aggregating plans of the same employer applies in 

determining whether the employer pays at least 50 percent of the cost of coverage. 

Eligibility for the credit is determined on a monthly basis. In 

general, an eligible coverage month is any month if, as of the first 

day of the month, the taxpayer (1) is an eligible individual, (2) is 

covered by qualified health insurance, (3) does not have other specified coverage, and (4) is not imprisoned under Federal, State, or 

local authority.2 In the case of a joint return, the eligibility requirements are met if at least one spouse satisfies the requirements. 

An eligible individual is an individual who is (1) an eligible TAA 

recipient, (2) an eligible alternative TAA recipient, or (3) an eligible 

Pension Benefit Guaranty Corporation (‘‘PBGC’’) pension recipient. 

An individual is an eligible TAA recipient during any month if 

the individual is receiving for any day of such month a trade readjustment allowance 3 or would be eligible to receive such an allowance but for the requirement that the individual exhaust unemployment benefits. Eligibility for the credit extends for one month 

after TAA eligibility ends. 

An individual is an eligible alternative TAA recipient during any 

month if the individual (1) is a worker described in section 

246(a)(3)(B) of the Trade Act of 1974 who is participating in the 

program established under section 246(a)(1) of such Act, and (2) is 

receiving a benefit for such month under section 246(a)(2) of such 

Act. An individual is treated as an eligible alternative TAA recipient during the first month that such individual would otherwise 

cease to be an eligible TAA recipient. 

An individual is a PBGC pension recipient for any month if he 

or she (1) is age 55 or over as of the first day of the month, and 

(2) is receiving a benefit any portion of which is paid by the PBGC. 

The IRS has interpreted the definition of PBGC pension recipient 

to also include certain alternative recipients and recipients who 

have received certain lump-sum payments on or after August 6, 

2002. 

An otherwise eligible taxpayer is not eligible for the credit for a 

month if, as of the first day of the month, the individual has other 

specified coverage. Other specified coverage is (1) coverage under 

any insurance which constitutes medical care (other than insurance 

for excepted benefits) 4 where at least 50 percent of the cost of the 

coverage is paid by an employers 5 (or former employer) of the individual or his or her spouse, or (2) coverage under certain governmental health programs. Specifically, an individual is not eligible 

for the credit if, as of the first day of the month, the individual is 


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6For this purpose, ‘‘individual health insurance’’ means any insurance which constitutes medical care offered to individuals other than in connection with a group health plan. Such term 

does not include Federal- or State-based health insurance coverage. 7For guidance on how a State elects a health program to be qualified health insurance for 

purposes of the credit, see Rev. Proc. 2004–12, 2004–1 C.B. 528. 

(1) entitled to benefits under Medicare Part A, enrolled in Medicare 

Part B, or enrolled in Medicaid or SCHIP, (2) enrolled in a health 

benefits plan under the Federal Employees Health Benefit Plan, or 

(3) entitled to receive benefits under chapter 55 of title 10 of the 

United States Code (relating to military personnel). An individual 

is not considered to be enrolled in Medicaid solely by reason of receiving immunizations. 

A person is not an eligible individual if he or she may be claimed 

as a dependent on another person’s tax return. A special rule applies with respect to alternative TAA recipients. For eligible alternative TAA recipients, an individual has other specified coverage 

if the individual is (1) eligible for coverage under any qualified 

health insurance (other than coverage under a COBRA continuation provision, State-based continuation coverage, or coverage 

through certain State arrangements) under which at least 50 percent of the cost of coverage is paid or incurred by an employer of 

the taxpayer or the taxpayer’s spouse, or (2) covered under any 

such qualified health insurance under which any portion of the cost 

of coverage is paid or incurred by an employer of the taxpayer or 

the taxpayer’s spouse. 

Qualified health insurance 

The credit can only be applied toward qualified health insurance, 

which is defined as (1) COBRA continuation coverage, (2) Statebased continuation coverage provided by the State under a State 

law that requires such coverage, (3) coverage offered through a 

qualified State high risk pool, (4) coverage under a health insurance program offered to State employees or a comparable program, 

(5) coverage through an arrangement entered into by a State and 

a group health plan, an issuer of health insurance coverage, an administrator, or an employer, (6) coverage offered through a State 

arrangement with a private sector health care coverage purchasing 

pool, (7) coverage under a State-operated health plan that does not 

receive any Federal financial participation, (8) coverage under a 

group health plan that is available through the employment of the 

eligible individual’s spouse, and (9) coverage under individual 

health insurance if the eligible individual was covered under individual health insurance during the entire 30-day period that ends 

on the date the individual became separated from the employment 

which qualified the individual for the TAA allowance, the benefit 

for an eligible alternative TAA recipient, or a pension benefit from 

the PBGC, whichever applies.6

Qualified health insurance does not include any State-based coverage (i.e., coverage described in (2)–(7) in the preceding paragraph), unless the State has elected to have such coverage treated 

as qualified health insurance and such coverage meets certain requirements.7 Such State coverage must provide that each qualifying individual is guaranteed enrollment if the individual pays the 

premium for enrollment or provides a qualified health insurance 

costs eligibility certificate and pays the remainder of the premium. 


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8 Creditable coverage is determined under the Health Insurance Portability and Accountability 

Act. Sec. 9801(c). 

In addition, the State-based coverage cannot impose any pre-existing condition limitation with respect to qualifying individuals. 

State-based coverage cannot require a qualifying individual to pay 

a premium or contribution that is greater than the premium or 

contribution for a similarly situated individual who is not a qualified individual. Finally, benefits under the State-based coverage 

must be the same as (or substantially similar to) benefits provided 

to similarly situated individuals who are not qualifying individuals. 

A qualifying individual is an eligible individual who seeks to enroll 

in the State-based coverage and who has aggregate periods of creditable coverage 8 of three months or longer, does not have other 

specified coverage, and who is not imprisoned. In general terms, 

creditable coverage includes health care coverage without a gap of 

more than 63 days. A qualifying individual also includes qualified 

family members of an eligible individual who is a qualifying individual. 

Qualified health insurance does not include coverage under a 

flexible spending or similar arrangement or any insurance if substantially all of the coverage is for excepted benefits. 

Other rules 

Amounts taken into account in determining the credit may not 

be taken into account in determining the amount allowable under 

the itemized deduction for medical expenses or the deduction for 

health insurance expenses of self-employed individuals. Amounts 

distributed from a medical savings account or health savings accounts are not eligible for the credit. The amount of the credit 

available through filing a tax return is reduced by any credit received on an advance basis. Married taxpayers filing separate returns are eligible for the credit; however, if both spouses are eligible individuals and the spouses file separate returns, then the 

spouse of the taxpayer is not a qualifying family member. 

The Secretary of the Treasury is authorized to prescribe such 

regulations and other guidance as may be necessary or appropriate 

to carry out the provision. 

REASONS FOR CHANGE

The Committee is aware that only a small percentage of those eligible for the HCTC actually use the credit and that the administrative costs associated with administering the credit are high in 

proportion to the delivered benefit. The Committee believes that 

the current HCTC structure is flawed and that it is appropriate to 

set a deadline for establishing a replacement program to ensure increased health coverage by those receiving TAA and PBGC benefits. Until a replacement program is established, the Committee believes that it is appropriate to increase the amount of the credit 

and to make other improvements to the credit to encourage greater 

participation. The Committee plans to use the findings of the GAO 

study required by the provision to enact substantial reforms to this 

benefit by January 1, 2010. 

The provision makes three changes to reduce the cost of HCTC 

coverage: (1) increases the credit from 65 percent to 85 percent; (2) 


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allows the credit to be applied to premiums paid between separation from employment and HCTC eligibility; and (3) requires insurers to charge premiums that reflect HCTC enrollees. 

The Government Accountability Office (GAO) found that high 

cost was the most commonly cited barrier to participating in the 

HCTC. Increasing the premium subsidy to 85 percent will enable 

more individuals and families to afford the cost of continuing coverage. Given that the average employer contribution is 72 percent 

for families and 84 percent for individuals, increasing the credit to 

85 percent at a time when income has dropped substantially will 

enable more workers harmed by trade policy to receive health benefits. 

Approval to receive the HCTC can take several months, during 

which time eligible individuals must either pay the full cost of their 

insurance premiums or become uninsured. Under current law, 

HCTC-eligible individuals who maintain insurance coverage must 

bear the full cost of their premiums. Allowing the HCTC to be applied retroactively for eligible individuals enrolled in qualified insurance will help alleviate this financial burden. 

Current law purports to protect against discriminatory premiums, but loopholes have permitted unacceptable price gouging 

for qualified HCTC plans in some states. Restricting premiums by 

imposing a rating requirement for HCTC policies that reflects the 

experience of the HCTC population will equalize premiums across 

the HCTC population and ensure that coverage is more affordable. 

It will also hold insurers accountable for being good stewards of 

taxpayer resources. 

The provision also makes several important changes to minimize 

gaps in insurance coverage: (1) eliminating the training requirement for individuals receiving unemployment insurance; (2) clarifying creditable coverage requirements; and (3) allowing continued 

participation in HCTC after certain events. 

The requirement in existing law that a TAA enrollee be in training before the enrollee is eligible for the HCTC fails to consider the 

fact that many workers do not immediately enroll in training. Instead, they often use the time they are receiving UI to actively look 

for a job. Only after exhausting their UI do they enroll in training. 

Tying the HCTC to participation in training therefore unnecessarily restricts the availability of the benefit to the workers it was 

designed to assist. 

Under current law, individuals who are eligible for HCTC may 

only qualify for the consumer protections (guaranteed issue, no preexisting condition exclusions, and same benefits and premiums for 

similarly situated individuals) if they have maintained three 

months of continuous coverage and have enrolled in a qualified 

plan within 63 days of losing coverage. Because delays in the certification and application approval process can take months, it is 

not unusual for an individual to experience a gap in coverage under 

these rules, thus forcing the individuals to maintain unsubsidized 

coverage or face being uninsured and be subjected to medical underwriting once they qualify for HCTC. The bill corrects this by 

eliminating the three month continuous coverage requirement and 

clarifying that tolling toward the 63-day lapse in coverage shall not 

begin until five days after the postmark date of the notice by the 

Secretary that the individual is approved for TAA benefits, and 


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thus eligible to enroll in a qualified health plan. PBGC recipients 

have 90 days to enroll in coverage in order to receive consumer protections. The bill preserves the current law requirement that the 

individual had coverage at the time of separation. 

Under current law, spouses and dependents of HCTC recipients 

lose their coverage if a divorce occurs or if the eligible individual 

qualifies for Medicare or dies. The bill employs the precedent established by COBRA that allows spouses and their dependent children 

to retain eligibility for the HCTC for up to 36 months in the event 

one of these situations occurs. 

EXPLANATION OF PROVISION

In general 

The provision sunsets the health coverage tax credit and makes 

several other modifications. 

Increase in credit percentage amount 

The provision increases the amount of the credit to 85 percent of 

the taxpayer’s expenses for qualified health insurance for the taxpayer and qualifying family members. 

Elimination of training requirement for individuals receiving unemployment compensation 

The provision modifies the definition of an eligible TAA recipient 

by eliminating the requirement that individuals receiving unemployment compensation be enrolled in training. 

Eligibility made retroactive to TAA-related loss of employment 

Under the provision, in the case of an individual who is an eligible TAA recipient or eligible alternative TAA recipient for any 

month, such individual is treated as an eligible individual for any 

month preceding the month that begins after the later of (1) the 

date of separation from employment which gives rise to the individual being an eligible TAA recipient or eligible alternative TAA 

recipient, or (2) December 1, 2007. 

Continued qualification of family members after certain events 

The provision provides continued eligibility for the credit for 

qualifying family members if the eligible individual (1) becomes entitled to Medicare, (2) is divorced, or (3) dies. Such treatment applies for the first 36 months after the event. In the case of the finalization of a divorce, the only qualifying family members that 

may be taken into account with respect to the spouse are those individuals who were qualifying family members immediately before 

such divorce finalization. 

Modification of creditable coverage requirement 

The provision eliminates the three-month requirement of creditable coverage in order for consumer protections to apply to Statebased coverage. Under the provision, in order for the consumer protections to apply in the case of an eligible TAA recipient or an eligible alternative TAA recipient, the individual must have a period of 

creditable coverage. 


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In the case of an eligible PBGC pension recipient, for the consumer protections to apply, the individual must enroll in the qualifying coverage during the 90-day period beginning on the later of 

(1) the last day of the first month that the individual becomes an 

eligible PBGC pension recipient or (2) the date of enactment. 

Under the provision, the Secretary of the Treasury must carry out 

a program to notify individuals prior to their becoming eligible 

PBGC pension recipients of this new requirement. 

Rules for determining lapse in creditable coverage 

Under the provision, in determining if there has been a 63-day 

lapse in coverage, in the case of a TAA-eligible individual, the period beginning on the date the individual has a TAA-related loss 

of coverage and ending on the date which is five days after the 

postmark date on the notice by the Secretary (or by any person 

designated by the Secretary) that the individual is eligible for a 

qualified health insurance costs credit eligibility certificate (under 

section 7527) is not taken into account. 

Rating system requirement for certain State-based coverage 

The provision adds an additional requirement to State-based coverage. Under the provision, in the case of coverage through an arrangement entered into by a State and an issuer of health insurance, premiums for such coverage must be restricted based on a 

community rating system with respect to eligible individuals and 

their qualifying family members, or based on a rate-band system 

under which the maximum rate charged must not exceed 150 percent of the standard rate with respect to eligible individuals and 

their qualifying family members. 

GAO study 

The provision requires the Comptroller General of the U.S. to 

conduct a study regarding the HCTC to be submitted to Congress 

no later than March 31, 2009. The study is to include an analysis 

of (1) the administrative costs of the Federal government with respect to the credit and the advance payment of the credit and of 

providers of qualified health insurance with respect to providing 

such insurance to eligible individuals and their families, (2) the 

health status and relative risk status of eligible individuals and 

qualified family members covered under such insurance, (3) participation in the credit and the advance payment of the credit by eligible individuals and their qualifying family members, including the 

reasons why such individuals did or did not participate and the effects of the provision on participation, and (4) the extent to which 

eligible individuals and their qualifying family members obtained 

health insurance other than qualifying insurance or went without 

insurance coverage. The provision provides the Comptroller General access to the records within the possession or control of providers of qualified health insurance if determined relevant to the 

study. The Comptroller General may not disclose the identity of 

any provider of qualified health insurance or eligible individual in 

making information available to the public. 


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Sunset of tax credit program 

Under the provision, the credit is not available for any month beginning after December 31, 2009, except in the case of an individual who was an eligible individual for a continuous period of 

months ending with such month and beginning before such date. 

EFFECTIVE DATE

The provision is effective for months beginning after the December 31, 2007. 

The provision relating to the rating system requirement for certain State-based coverage is effective for months beginning after 

March 31, 2008. 

For purposes of carrying out the advance payment program, the 

provision allows the Secretary of the Treasury to waive certain requirements for one or more months beginning after March 31, 

2008, to the extent that the Secretary determines that such delay 

is necessary to properly implement the provision as part of the advance payment program. This rule applies to modification of the 

training requirement, eligibility made retroactive to TAA-related 

loss of employment, and continued qualification of family members 

after certain events. 

SUBTITLE E—WAGE INSURANCE (SEC. 151 OF THE BILL AND SEC. 246 OF THE ACT) 

Reemployment trade adjustment assistance program for older workers. 

PRESENT LAW

The Trade Act of 2002 created a demonstration project for alternative trade adjustment assistance for older workers (ATAA or 

‘‘wage insurance’’). Through this program, some workers who are 

eligible for Trade Adjustment Assistance (TAA) and reemployed at 

lower wages may receive a partial wage subsidy. Under the program, States use Federal funds provided under The Trade Act of 

1974 to pay eligible workers up to 50 percent of the difference between reemployment wages and wages at the time of separation. 

Eligible workers may not earn more than $50,000 in reemployment 

wages, and total payments to a worker may not exceed $10,000 

during a maximum period of two years. 

In addition to having been certified for TAA, such workers must 

be at least 50 years of age, obtain full-time reemployment with a 

new firm within 26 weeks of separation from employment, and 

have been separated from a firm that is specifically certified for 

ATAA. When considering certification of a firm for ATAA, the Secretary of Labor considers whether a significant number of workers 

in the firm are 50 years of age or older and possess skills that are 

not easily transferable. ATAA beneficiaries are limited from all 

TAA benefits except for the Health Coverage Tax Credit (HCTC). 

This program is set to expire on December 31, 2007. 

EXPLANATION OF PROVISION

This provision eliminates the current-law requirement that a 

worker must find employment within 26 weeks of being laid off to 

be eligible for the wage insurance benefit. It replaces it with a reVerDate Aug 31 2005 07:39 Oct 30, 2007 Jkt 069006 PO 00000 Frm 00060 Fmt 6659 Sfmt 6602 E:\HR\OC\HR414P1.XXX HR414P1

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quirement that the clock on the two-year duration of the benefit 

begin at the sooner of exhaustion of regular unemployment benefits 

or reemployment, allowing initial receipt of the wage insurance 

benefit at any point during that two-year period. 

The provision eliminates a requirement that firms (in addition to 

individuals) be specifically certified for wage insurance in addition 

to TAA certification. 

The provision increases the limit on wages in eligible reemploy- ment from $50,000 a year to $60,000 a year. Similarly, it increases 

the maximum wage insurance benefit (over two years) from up to 

$10,000 to up to $12,000. 

The provision lifts the restriction on wage insurance recipients’ participation in TAA-funded training. It also permits workers reemployed less than full-time, but at least 20 hours a week, and in 

approved training, to receive the wage insurance benefit (which 

would be prorated if the worker is reemployed for fewer hours compared to previous employment). 

REASONS FOR CHANGE

The Committee believes that the ATAA, or wage insurance, program is a potentially beneficial option for many older workers, but 

it includes unnecessary barriers to participation. The Committee 

believes that changes to section 246 of the Trade Act will make the 

wage insurance program a more viable option for many more potentially interested workers. Inflation has lessened the maximum 

value of the wage insurance benefit and lowered the real value of 

the maximum earnings permitted for eligibility. Several other requirements make the program inaccessible and unattractive. 

Findings from the Government Accountability Office (GAO) highlight the need to reform specific aspects of the program. First, the 

26–week reemployment deadline was cited by the GAO as one of ‘‘two key factors [that] limit participation.’’ The GAO went on to 

note, 

‘‘. . . Officials in States [the GAO] visited said that one 

of the greatest obstacles to participation was the requirement for workers to find a new job within 26 weeks after 

being laid off. For example, according to officials in one 

State, 80 percent of participants who were seeking wage 

insurance but were unable to obtain it failed because they 

could not find a job within the 26–week period. The challenges of finding a job within this time frame may be compounded by the fact that workers may actually have less 

than 26 weeks to secure a job if they are laid off prior to 

becoming certified for TAA. For example, a local caseworker in one State [the GAO] visited said that the 26 

weeks had passed completely before a worker was certified 

for the benefit.’’

Second, the GAO found that automatically certifying workers for 

the wage insurance benefit would cut the Department of Labor’s 

workload and promote program participation. 

‘‘. . . in fiscal year 2006, nearly 90 percent of TAA-certified petitions were also certified for the wage insurance 

benefit. Labor officials said that eliminating this step in 

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certified workers who meet the individual eligibility criteria for the wage insurance benefit to participate—would 

decrease the agency’s investigation workload somewhat 

and may increase participation in the wage insurance benefit.’’

Currently, workers opting for wage insurance currently must 

also surrender eligibility for TAA-funded training and be reemployed full-time. 

The Committee believes that eliminating the 26-week deadline 

for reemployment, eliminating the need for firms to be certified for 

wage insurance, eliminating the prohibition on wage insurance 

beneficiaries receiving TAA-funded training, and allowing part-time 

workers access to the wage insurance benefit should make the 

wage insurance program more accessible and attractive. 

EFFECTIVE DATE

This provision is effective upon enactment. 

SUBTITLE F—OTHER MATTERS (SEC. 161–168 OF THE BILL AND SEC. 

239, 243, 245, 249, 284, 285, 298 OF THE ACT) 

Agreements with States 

PRESENT LAW

Present law gives the Secretary of Labor the authority to delegate to the States through agreements many aspects of TAA implementation, including responsibilities to (1) receive applications for 

TAA and provide payments; (2) perform employment services and 

case management activities; (3) issue waivers. It also mandates 

that any agreement entered into shall include sections requiring 

that the provision of TAA services and training shall be coordinated with the provision of Workforce Investment Act (WIA) services and training. In carrying out its responsibilities, each State 

shall: notify workers who apply for UI about TAA; facilitate early 

filing for TAA benefits; advise workers to apply for training when 

they apply for TRA; and interview affected workers as soon as possible for purposes of getting them into training. States must also 

submit to the Department of Labor information like that provided 

under a WIA State plan. 

EXPLANATION OF PROVISION

This provision incorporates the level of employment and case 

management services to be provided to TAA eligible workers specified in a provision in the bill, to ensure that they get the assistance 

to which they are entitled. 

REASON FOR CHANGE

To ensure that TAA enrollees get the level of employment and 

case management services to which they are entitled, the Committee believes that it is necessary to incorporate those obligations 

into the agreements that the Department of Labor enters into with 

each of the States concerning the administration of TAA. 


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EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Fraud and recovery of overpayments 

PRESENT LAW

An overpayment may be waived if, in accordance with the Secretary’s guidelines, the payment was made without fault on the 

part of such individual, and requiring such repayment would be 

contrary to ‘‘equity and good conscience.’’

EXPLANATION OF PROVISION

The provision states that repayment shall be waived if the overpayment was made without fault on the part of such individual and 

if repayment ‘‘would cause a financial hardship for the individual 

(or the individual’s household, if applicable) when taking into consideration the income and resources reasonably available to the individual or household and other ordinary living expenses of the individual or household.’’

REASON FOR CHANGE

The Committee believes that the Department of Labor has adopted a very strict standard for issuing overpayment waivers. In particular, 20 CFR Sec. 617.55(a)(2)(ii)(C) defines equity and good conscience to require ‘‘extraordinary and lasting financial hardship’’

that would ‘‘result directly’’ in the ‘‘loss of or inability to obtain 

minimal necessities of food, medicine, and shelter for a substantial 

period of time’’ and ‘‘may be expected to endure for the foreseeable 

future.’’ TAA administrators have told the Committee that they 

know of no worker who has met this strict waiver standard. In including standard statutory waiver language in TAA, there is no indication that Congress intended to make waivers impossible to secure. To the contrary, the Committee believes that intended that 

overpaid individuals without fault and unable to repay their TAA 

overpayments would have a reasonable opportunity for waivers of 

those overpayments. This amendment therefore conforms the law 

to Congress’s intent. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Office of Trade Adjustment Assistance 

PRESENT LAW

The TAA for Workers program is currently operated by the Employment and Training Administration at the Department of Labor. 

EXPLANATION OF PROVISION

The provision creates an Office of Trade Adjustment Assistance, 

headed by a Senate-confirmed Deputy Assistant Secretary of Labor 

who will be responsible for overseeing implementation of the TAA 

for Workers program and carrying out functions delegated by the 

Secretary of Labor, including: making group certification determinations; providing TAA information and assisting workers and 


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others prepare petitions; ensuring covered workers receive Sec. 235 

employment and case management services; ensuring States comply with the terms of their Sec. 239 agreements; advocating for 

workers applying for assistance; receiving workers’ complaints and 

grievances; and, operating a hotline that workers and employers 

may call with questions about TAA benefits, eligibility requirements, and application procedures. 

REASON FOR CHANGE

It is the view of the Committee that creating an Office of Trade 

Adjustment Assistance in the Department of Labor with primary 

accountability for the management and performance of the TAA for 

Workers program will improve the program’s operation. By requiring that the individual running that office be confirmed by the Senate, accountability and oversight of the individual who serves as 

the Deputy Assistant Secretary for TAA and the TAA program as 

a whole will be enhanced. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Collection of data and reports; information to workers 

PRESENT LAW

TAA does not contain statutory language requiring the collection 

of data or performance goals and the TAA program has suffered a 

history of problems with its performance data that has undermined 

the data’s credibility and limited their usefulness. Most of the outcome data reported in a given program year actually reflects participants who left the program up to 2 years earlier. In addition, 

as of FY 2006, the Department of Labor does not consistently report TAA data by State or industry or by services or benefits received. 

While the Department of Labor has take some steps aimed at improving performance data, the data remain suspect and fail to capture outcomes for some of the program’s participants, and many 

participants are not included in the final outcomes at all. 

EXPLANATION OF PROVISION

Within 90 days of enactment, the Secretary of Labor must implement a system for collecting data on all workers who apply for or 

receive TAA. The system must include the following data classified 

by State, industry, and nationwide totals: number of petitions; 

number of workers covered; processing time for each petition; a 

breakdown of certified petitions by the cause of job loss (increased 

imports etc.); number of workers in any aspect of TAA; reemployment rates/sectors after receiving TAA; the type of TAA received 

(training etc.); number receiving each type of assistance; average 

duration of time workers receive each type; fields of training/education in which workers enroll; the number of workers participating in each field, classified by major types; the number of workers failing to complete a course of training or education, classified 

by the cause; the number of training waivers granted, classified by 

type of waiver; and wages before separation and any job obtained 

after receiving TAA benefits. Within 16 months of enactment, the 


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Secretary of Labor must submit a report on whether changes to eligibility requirements, benefits, or training funding should be made 

based on the data collected. Those data must be made available to 

the public on the Department of Labor’s website in a searchable 

format and must be updated quarterly. 

REASON FOR CHANGE

The Committee believes that valuable information on TAA and 

its impact is neither being collected nor being made publicly available. This, in turn, inhibits the ability of Congress to perform its 

oversight responsibilities and, if necessary, to refine and improve 

the program. Additionally, the Committee believes that all of the 

data that the Department of Labor gather should be made available and posted on its website in a searchable format. This will enhance the accountability of the TAA program and the Department 

of Labor, not just to Congress, but to the American people as well. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Extension of TAA for Workers and TAA for Farmers Programs 

PRESENT LAW

The authorization of the TAA for Workers program expires on 

December 31, 2007. The authorization and the appropriation for 

the TAA for Farmers program expire on December 31, 2007. 

EXPLANATION OF PROVISION

The provision reauthorizes the TAA for Workers program 

through September 30, 2012. The provision reauthorizes the TAA 

for Farmers through September 30, 2012 at $81,000,000 for the 9- 

month period beginning on January 1, 2008, and $90,000,000 for 

each of the fiscal years 2009 through 2012. 

REASON FOR CHANGE

The Committee believes that in an era of increasing trade and 

globalization, TAA is needed now more than ever to ensure that 

Americans obtain the skills and knowledge they need to obtain 

good paying jobs and contribute to the strength and competitiveness of the U.S. economy. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Judicial review 

PRESENT LAW

Present law authorizes workers, farmers, and firms to file appeals of a denial of a petition within 60 days of notice of the denial 

in the Court of International Trade (CIT). The Secretary’s findings 

of fact, if supported by substantial evidence, shall be conclusive. 

For good cause, the CIT can remand a case to the Department of 

Labor to take further evidence and resubmit it. The CIT can affirm 

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viewable by the United States Court of Appeals for the Federal Circuit and the United States Supreme Court. 

EXPLANATION OF PROVISION

The provision amends existing law to require that the Secretary’s 

findings of fact be supported by substantial evidence and based on 

a reasonable investigation. The provision gives the Court of International Trade the authority to remand a case so that further evidence can be taken, or reverse the action of the Secretary. If upon 

remand, the Secretary submits new or modified findings, they must 

be supported by substantial evidence and be based on a reasonable 

investigation. 

REASON FOR CHANGE

The Court of International Trade has documented the Department of Labor’s failure to investigate cases properly, which has led 

to delays in affected workers receiving TAA. These delays have serious consequences for the workers whose certification petitions are 

denied. The Committee believes that by requiring that the Department of Labor’s findings of fact be supported by substantial evidence and based on a reasonable investigation, the Department of 

Labor is more likely to do a thorough investigation of the worker’s 

petition. And by giving the CIT the authority to reverse negative 

determinations and certify group petitions, the time it takes to fix 

an erroneous denial of certification would be decreased. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Liberal construction of certification of workers and firms 

PRESENT LAW

There is nothing in present law regarding how TAA is to be interpreted. 

EXPLANATION OF PROVISION

The provision states that the TAA provisions concerning workers 

and firms shall be liberally construed in favor of certifying workers 

and firms for trade adjustment assistance. 

REASON FOR CHANGE

TAA is designed to help those adversely impacted by trade and 

globalization. In this spirit, the Committee believes that TAA statute should not be administered in such a way that it seeks to weed 

out eligible applicants; rather, it should be working to provide access to TAA’s benefits for all those who are entitled to them. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 


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TITLE II—TRADE ADJUSTMENT ASSISTANCE FOR FIRMS 

(SECS. 201–204 AND SECS. 251, 256, 261, 265, 266 OF THE ACT.) 

Trade adjustment assistance for firms 

PRESENT LAW

A firm may file a petition for certification with the Secretary of 

Commerce. Upon receipt of the petition, the Secretary shall publish 

notice in the Federal Register that the petition has been received 

and is being investigated. The petitioner, or anyone else with a 

substantial interest, may request a public hearing concerning the 

petition. 

To be certified, a firm must show: (1) a ‘‘significant’’ number of 

workers became or are threatened to become totally or partially 

separated; and sales or production of an article, or both, decreased 

absolutely; or sales or production, or both, of an article that accounted for not less than 25 percent of the total production or sales 

of the firm during the 12-month period preceding the most recent 

12-month period for which data are available have decreased absolutely; and increased imports of competing articles ‘‘contributed importantly’’ to the decline in sales, production, and/or workforce. 

A firm certified under Sec. 251 has two years in which to file an 

adjustment assistance application, which must include an economic 

adjustment proposal. 

In deciding whether to approve an application, the Secretary of 

Commerce must conclude that the proposal: (1) is reasonably calculated ‘‘to materially contribute’’ to the economic adjustment of 

the firm; (2) gives adequate consideration to the interests of the 

firm’s workers; and (3) demonstrates that the firm will use its own 

resources for adjustment. 

The Secretary must make its decision with 60 days. 

EXPLANATION OF PROVISION

The provision makes service sector firms potentially eligible for 

TAA for Firms. It also expands the look back so that all firms can 

use three years’ worth of data, as opposed to one year, to show that 

the firm’s sales, production, or both, have decreased absolutely or 

that the firm’s sales, production or both of an article or service that 

accounts for at least 25% of its total production or sales have decreased absolutely. 

The provision clarifies that in evaluating whether a significant 

number of workers is threatened with total or partial separation, 

the Secretary of Commerce shall consider demonstrably adverse 

trends, like unused production capacity, a significant profitability 

decline, or a significant market share decline. 

In determining whether there have been increased imports, the 

provision makes it clear that the Secretary may use data from any 

of the three preceding calendar years when determining and may 

determine that increased imports exist if customers accounting for 

a significant percentage of the decline certify that they are buying 

imports. The Secretary may also take into consideration the fact 

that a firm petitioning for certification is in an industry where imports make up a large portion of the market, making it more difficult to show increased imports. 


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The provision also requires the Secretary to obtain information 

from the customers when requested by the firm petitioning for TAA 

coverage. The information must be kept confidential, but can be 

viewed in camera by a court. 

Additionally, the provision requires the Secretary of Commerce, 

upon receiving notice from the Secretary of Labor that the workers 

of a firm are TAA-covered, to notify that firm of its potential TAA 

eligibility. 

REASON FOR CHANGE

Most service sector firms currently are ineligible for TAA for 

Firms because of a statutory requirement that the workers must 

have been employed by a firm that produces an ‘‘article.’’ In an era 

when 80% of U.S. workers are employed in the service sector, the 

Committee believes that service sector firms should be eligible for 

TAA. 

The Committee also notes that firms have complained that the 

limited ‘‘look back’’ under existing law unfairly restricted their ability to show that increased imports were hurting their businesses 

and that the look back in existing law is inconsistent with the 

timeframe used in antidumping and countervailing duty cases. 

Because it can be difficult to show increased imports of services 

due to a lack of data, the Committee believes it is necessary to provide for an alternative way to demonstrate TAA eligibility. One 

way to do so is by allowing customers of the firm that are responsible for a significant percentage of the sales decline to certify that 

they are buying imports. Similarly, it is important to give the Secretary the authority to consider the fact that some firms work in 

industries heavily impacted by imports, when making certification 

determinations. 

The Administration has pointed out that a firm may not know 

that it could be TAA eligible, despite the fact that workers at the 

same firm have qualified for the TAA for Workers program. Like 

the Administration, the Committee believes that it is important to 

give these firms notice of their potential eligibility for TAA’s benefits, so that they can take advantage of the program to more effectively meet the challenges of the global marketplace. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Extension of authorization of trade adjustment assistance for firms 

PRESENT LAW

The authorization of the TAA for Firms program expires on December 31, 2007. The program is currently authorized at $16 million per year. 

EXPLANATION OF PROVISION

This provision reauthorizes the program through September 30, 

2012, and increases its funding to $50,000,000 a year. Of that 

amount, $350,000 is set aside to fund full-time TAA for Firms positions at the Department of Commerce. 


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REASON FOR CHANGE

The Committee believes that the TAA for Firms program is 

under funded—currently, at least $15 million in approved projects 

lack funding. Additionally, the Firms team at the Department of 

Commerce lacks adequate full-time staffing to administer the program. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Industry-wide programs for the development of new services 

PRESENT LAW

Present law authorizes the Secretary of Commerce to provide 

technical assistance for the establishment of industry-wide programs for new product development, new process development, export development and other uses. The technical assistance can go 

to groups and associations in which a substantial number of workers or firms have been certified for TAA. 

EXPLANATION OF PROVISION

This provision adds language authorizing the Department of 

Commerce to establish programs relating to services, reflecting the 

expansion of TAA coverage to the service sector. The provision also 

makes groups and associations eligible for technical assistance if a 

substantial number of workers in the group or association has received industry-wide certification. 

REASON FOR CHANGE

This is conforming amendment. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

Demonstration project on strategic trade transformation assistance 

PRESENT LAW

Under current law, there are no TAA of Firms demonstration 

projects or pilots authorized. 

EXPLANATION OF PROVISION

The provision establishes a three-year demonstration project 

within the Trade Adjustment Assistance (TAA) for Firms program. 

The demonstration project will promote seven primary goals, including expanding the number of firms able to participate in the 

program without expending more money, integrating the benefits of 

other government programs with TAA for Firms, increasing exports 

of small and medium sized firms, and helping small and medium 

sized firms secure government contracts. The project would give 

preference to existing Trade Adjustment Assistance Centers 

(TAACs) for the administration of the project. Following the 

project, the Secretary of Commerce would be required to submit a 

report addressing: the impact of the project on mitigating the impact of imports in terms of competitiveness, and the cost-effectiveVerDate Aug 31 2005 07:39 Oct 30, 2007 Jkt 069006 PO 00000 Frm 00069 Fmt 6659 Sfmt 6602 E:\HR\OC\HR414P1.XXX HR414P1

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ness of extending or expanding the project. Up to $1,000,000 per 

year is authorized to be spent on the demonstration project. 

REASON FOR CHANGE

The TAA for Firms program is operated by regional Trade Adjustment Assistance Centers (TAACs). These centers are at the 

heart of the program’s ability to deliver creative solutions to problems inhibiting firms’ competitiveness. To allow these centers of excellence to develop, better ways to enhance the competitiveness of 

American employers, save American jobs before they are lost, and 

maximize the resources allocated to the program, in coordination 

with the Secretary, a demonstration project is needed. The Committee believes that the demonstration project must be conducted 

in close coordination with all of the existing Teaks and must complement the underlying TAA for Firms program. 

EFFECTIVE DATE

The provision goes into effect on the date of enactment. 

TITLE III—UNEMPLOYMENT INSURANCE 

(SEC. 301–304 OF THE BILL AND SEC. 903 OF THE SOCIAL SECURITY

ACT OF 1935 (42 U.S.C. 1103)) AND SEC. 3301 OF THE INTERNAL

REVENUE CODE OF 1986 (26 U.S.C. 3301)) 

Special Transfers to State accounts of the Unemployment Trust 

Fund 

PRESENT LAW

Section 903 of the Social Security Act describes particular circumstances under which money is transferred to eligible State unemployment accounts from the employment security 35 administration account, extended unemployment compensation account and 

the Federal unemployment account when these account balances 

exceed certain levels. Such transfers of excess funds in the federal 

portion of the Unemployment Trust Fund to State accounts are 

called Reed Act distributions. 

EXPLANATION OF PROVISION

This provision would amend section 903 of the Social Security 

Act by providing up to $7 billion in additional funds to States’ accounts within the Unemployment Trust Fund (UTF) as ‘‘modernization incentive payments’’ for including certain policies in State law. 

Funds would be distributed to the State UTF accounts based on the 

State’s share of estimated federal unemployment taxes (excluding 

reduced credit payments) paid by the State’s employers. One-third 

of a State’s maximum payment would be contingent on the State 

law either, using a base period that includes the most recently 

completed calendar quarter before the start of the benefit year for 

the purposes of determining eligibility for Unemployment Compensation (UC), or providing that, in case of an individual who 

would not otherwise be eligible for UC under State law, eligibility 

shall be determined using a base period that includes such a calendar quarter. The remainder of the maximum payment would be 


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contingent on State law containing at least two of the following 

three provisions: 

1. No denial of UC under State law sections relating to availability for work, active search for work, or refusal to accept work 

solely because such individual is seeking only part-time work. 

States may exclude an individual if the majority of the weeks of 

work in such individual’s base period do not include part-time 

work. 

2. No disqualification from regular UC for separation if it is for 

compelling family reasons. These reasons must include (i) domestic 

violence, (ii) illness or disability of an immediate family member, 

and (iii) the need to accompany a spouse to a place from where it 

is impractical to commute and is due to a change in location of the 

spouse’s employment. 

3. Weekly UC continues to individuals who have exhausted all 

rights to regular and extended UC but are enrolled and making 

satisfactory progress in a State-approved training program or in a 

job training program authorized under the Workforce Investment 

Act of 1998. The benefit extension must be for at least an additional 26 weeks and be equivalent to the previously calculated UC 

benefit. 

States must submit applications for incentive payments. The Secretary of Labor may use regulations to determine compliance with 

the proposed law. States must be eligible for certification under 

section 303 of the Social Security Act and under section 3304 of the 

Federal Unemployment Tax Act. 

States may use the incentive payments received only for payment 

of UC benefits. However, by following existing law sections in Section 903(c)(2), excluding subparagraph (B), of the Social Security 

Act, a State legislature’s specific appropriation may allow a State 

to use this money for administration of its unemployment compensation law and public employment offices. 

The Secretary of Labor must reserve $7 billion for incentive payments in the federal unemployment account (FUA) of the UTF. 

Section 302 also would increase the total amount for transfer to 

States for administrative purposes under 903(a) of the Social Security Act by $100 million in each of the fiscal years 2008 through 

2012. Funds would be distributed to the State UTF accounts based 

on the State’s share of estimated federal unemployment taxes made 

by the State’s employers. 

Any advances made to the State account will be first credited 

against, and operate to reduce, any additional amount transferred 

to the State account due to these $100 million transfers. 

Any additional amount transferred to a State account as a result 

of these $100 million transfers may be used by the State agency 

of such State only in (i) the payment of expenses incurred by it by 

carrying out of the purposes in State law required to receive the 

incentive payments, (ii) improved outreach to individuals who 

might be eligible for regular UC by virtue of the changes in State 

law, (iii) the improvement of unemployment benefit and unemployment tax operations, and (iv) staff-assisted reemployment services 

for UC claimants. 

The funds for these payments shall be taken out of the employment security administration account (ESAA). 


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REASON FOR CHANGE

The Committee believes that the Unemployment Insurance (UI) 

system provides critical support that helps unemployed workers 

and their families avoid dire economic circumstances. The decrease 

in the share of unemployed workers receiving UI benefits, from 

50% in the 1950s to just 35% today has weakened both its ability 

to smooth income and consumption for unemployed workers and its 

ability to act as an effective macroeconomic stabilizer during weaker economic conditions. 

The Government Accountability Office (GAO) recently testified 

that low-wage workers (those earning roughly less than $9 an 

hour) were only about one-third as likely to receive unemployment 

benefits compared to higher wage workers even though they were 

much more likely to be unemployed. The GAO found this inequity 

was at least partly due to Unemployment Insurance (UI) eligibility 

rules, ‘‘particularly rules in many States that do not count workers’’

most recent earnings toward their minimum earnings required for 

eligibility.’’

Additionally, the GAO found low levels of UI receipt among parttime workers, despite the fact that UI taxes are paid on their behalf. Again, the GAO pointed to UI eligibility rules in certain 

States as limiting access to benefits. Finally, GAO reviewed 

changes in the labor market since the unemployment insurance 

program was established over 70 years ago, most notably the significant increase in the number of women in the workforce. 

In response to these findings, as well as to the recommendations 

made in the mid–1990s by the bipartisan Advisory Council on Unemployment Compensation, the bill would reward and encourage 

States for implementing specific policies designed to remove barriers to jobless workers accessing needed benefits. There are no 

new federal mandates on States contained in the legislation; only 

financial incentives. All of the reforms proposed by the bill have already been successfully implemented in at least a few and in some 

cases many States. 

The Committee notes that many of the reforms supported by the 

new incentive payments would particularly help women, who are 

more likely to be employed in part-time and/or low-wage jobs, as 

well as more likely to need to leave work for compelling family reasons, such as domestic violence, taking care of a sick or disabled 

child, and following a spouse whose job has moved. Increasing the 

share of the unemployed receiving UI would simultaneously increase UI’s effectiveness in helping workers and families involuntarily and temporarily unemployed and enhance UI’s macroeconomic countercyclical stabilizing role. 

EFFECTIVE DATE

This provision is effective upon enactment. 

Extension of FUTA tax 

PRESENT LAW

Section 3301 of the Internal Revenue Code specifies the standard 

employer excise tax that finances the Federal share of Unemployment Insurance (UI) expenses, as well as Employment Services. 


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This section, in combination with section 3302(b) of the Internal 

Revenue Code of 1986, results in an effective Federal tax rate of 

0.8 percent on the first $7,000 of wages for each employee for employers in States with unemployment compensation laws certified 

under section 3304 of the Internal Revenue Code of 1986. That rate 

is scheduled to decrease to 0.6 percent, beginning in Calendar Year 

2008. The 0.2 percentage point difference between what the rate is 

scheduled to fall to (0.6 percent) and the current law rate (0.8 percent) is called the Federal Unemployment Tax Act Surtax (FUTA 

Surtax). While the FUTA Surtax has been scheduled to expire multiple times over the past 30 years, Congress has consistently extended it. 

EXPLANATION OF PROVISION

This provision would maintain the 6.2 percent unemployment insurance excise tax rate on the first $7000 in wages through 2010, 

thus extending the 0.2 percent FUTA Surtax through 2010. 

REASONS FOR CHANGE

The Committee believes that extending the FUTA Surtax for a 

few years will fund much needed modernization reforms in State 

UI systems as well as help maintain the solvency of the Federal 

Unemployment Trust Fund. President Bush’s proposed FY 2008 

budget recommends extending the 30–year old FUTA surtax to 

‘‘support the continued solvency of the Federal unemployment trust 

funds and maintain the ability of the unemployment system to adjust to any economic downturns.’’ The modest FUTA Surtax equals 

a maximum of $14 per worker, per year. 

EFFECTIVE DATE

This provision is effective upon enactment. 

Safety Net Review Commission 

PRESENT LAW

There is no present law that is modified or directly amended by 

this provision. 

EXPLANATION OF PROVISION

This would establish a Safety Net Review Commission to evaluate the unemployment compensation program, the Trade Adjustment Assistance program, the Job Corps program, programs under 

the Workforce Investment Act, and other employment assistance 

programs, including the purpose, goals, countercyclical effectiveness, coverage, benefit adequacy, trust fund solvency, funding of 

State administrative costs, administrative efficiency, and any other 

aspects of each such program, as well as any related sections of the 

Internal Revenue Code of 1986 (including, for example, the taxation of public benefits), and to make recommendations for their 

improvement. 

The Commission would include members representing the interests of labor, business, and State governments, with 5 members appointed by the President, and 3 each by the President pro tempore 

of the Senate and the Speaker of the House of Representatives. 


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Within 6 months from enactment, the Commission shall submit its 

findings and recommendations to the President and Congress and 

shall terminate two months after submitting this report. 

REASONS FOR CHANGE

The Committee is interested in learning more about the adequacy, effectiveness, and coverage of existing programs designed to 

help dislocated workers. 

EFFECTIVE DATE

This provision is effective upon enactment. 

TITLE IV—MANUFACTURING REDEVELOPMENT ZONES 

DESIGNATION AND ELIGIBILITY RULES

Designation 

The Secretary of the Treasury shall designate not more than 24 

manufacturing redevelopment zones (the ‘‘zones’’) during the twoyear period beginning on the date of enactment of this proposal. 

These zones shall be selected from among areas nominated for designation by their State or local governments. The aggregate population of the designated zones shall not exceed two million. This determination of population shall be made on the basis of the most 

recent decennial census for which data are available. 

Any such designation shall remain in effect during the period beginning on the date of designation and ending the earliest of: (1) 

the close of the tenth calendar year beginning on or after the date 

of the designation; (2) the termination date designated by the State 

or local governments as provided for in their nomination; or (3) the 

date the Secretary revokes the designation. The Secretary may revoke a designation if the Secretary determines that the local government or State in which it is located: (1) has modified the boundaries of the area; or (2) is not complying substantially with or fails 

to make progress in achieving the benchmarks set forth in the strategic plan included in the application. 

Rules similar to the rules for designation and application of enterprise communities and empowerment zones shall apply to manufacturing redevelopment zones (sec. 1391(e) and (f) of the Code). 

Eligibility criteria 

A nominated area shall be eligible for designation as a manufacturing redevelopment zone if three requirements are satisfied: (1) 

the area must meet the eligibility criteria (e.g., population, distress, 

size, and poverty rate criteria) applicable to enterprise communities 

and empowerment zones (sec. 1392); (2) the area must have experienced a significant decline in the number of individuals employed 

in manufacturing or has a high concentration of abandoned or underutilized manufacturing facilities; and (3) no portion of the nominated area is located in an empowerment zone (sec. 1391) or renewal community (sec. 1400E) unless the local government which 

nominated the area elects to terminate such designation as an empowerment zone or renewal community. In determining whether a 

nominated area is eligible for designation as a manufacturing redevelopment zone, the Secretary may, where necessary to carry out 


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9Sec. 141(b) and (c). 

the purposes of this provision, waive the poverty rate criteria if it 

is shown that the nominated area has experienced a loss of manufacturing jobs in excess of 25 percent over the previous 20 years. 

The terms defined in section 1393 with regard to enterprise communities and empowerment zones shall have the same meaning 

with regard to manufacturing redevelopment zones. Finally, the 

special rules provided in section 1392(b)(c) and (d) and section 

1393(a)(4)(7)(8) and (9) with regard to enterprise communities and 

empowerment zones shall apply with regard to manufacturing redevelopment zones. 

MANUFACTURING REDEVELOPMENT ZONE TAX CREDIT BONDS (SEC. 

401 OF THE BILL AND NEW SEC. 1400U–3 OF THE CODE) 

PRESENT LAW

Tax-exempt bonds 

In general 

Subject to certain Code restrictions, interest on bonds issued by 

State and local governments generally is excluded from gross income for Federal income tax purposes. Bonds issued by State and 

local governments may be classified as either governmental bonds 

or private activity bonds. Governmental bonds are bonds the proceeds of which are primarily used to finance governmental functions or which are repaid with governmental funds. Private activity 

bonds are bonds for which the State or local government serves as 

a conduit providing financing to nongovernmental persons. For this 

purpose, the term ‘‘nongovernmental person’’ generally includes the 

Federal government and all other individuals and entities other 

than States or local governments. The exclusion from income for interest on State and local bonds does not apply to private activity 

bonds, unless the bonds are issued for certain permitted purposes 

(‘‘qualified private activity bonds’’) and other Code requirements 

are met. 

Private activity bond tests 

Present law provides two tests for determining whether a State 

or local bond is in substance a private activity bond, the private 

business test and the private loan test.9

Private business tests 

Private business use and private payments result in State and 

local bonds being private activity bonds if both parts of the twopart private business test are satisfied—

More than 10 percent of the bond proceeds is to be used (directly 

or indirectly) by a private business (the ‘‘private business use 

test’’); and 

More than 10 percent of the debt service on the bonds is secured 

by an interest in property to be used in a private business use or 


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10The 10-percent private business use and payment threshold is reduced to five percent for 

private business uses that are unrelated to a governmental purpose also being financed with 

proceeds of the bond issue. 11 ‘‘See Treas. Reg. sec. 1.141–3(b)(4) and Rev. Proc. 97–13, 1997–1 C.B. 632. 

to be derived from payments in respect of such property (the ‘‘private payment test’’).10

Private business use generally includes any use by a business entity (including the Federal government), which occurs pursuant to 

terms not generally available to the general public. For example, 

if bond-financed property is leased to a private business (other than 

pursuant to certain short-term leases for which safe harbors are 

provided under Treasury regulations), bond proceeds used to finance the property are treated as used in a private business use, 

and rental payments are treated as securing the payment of the 

bonds. Private business use also can arise when a governmental 

entity contracts for the operation of a governmental facility by a 

private business under a management contract that does not satisfy Treasury regulatory safe harbors regarding the types of payments made to the private operator and the length of the contract.11

Private loan test 

The second standard for determining whether a State or local 

bond is a private activity bond is whether an amount exceeding the 

lesser of (1) five percent of the bond proceeds or (2) $5 million is 

used (directly or indirectly) to finance loans to private persons. Private loans include both business and other (e.g., personal) uses and 

payments by private persons; however, in the case of business uses 

and payments, all private loans also constitute private business 

uses and payments subject to the private business test. Present law 

provides that the substance of a transaction governs in determining 

whether the transaction gives rise to a private loan. In general, any 

transaction which transfers tax ownership of property to a private 

person is treated as a loan. 

Qualified private activity bonds 

As stated above, interest on private activity bonds is taxable unless the bonds meet the requirements for qualified private activity 

bonds. Qualified private activity bonds permit States or local governments to act as conduits providing tax-exempt financing for certain private activities. The definition of qualified private activity 

bonds includes an exempt facility bond, or qualified mortgage, veterans’ mortgage, small issue, redevelopment, 501(c)(3), or student 

loan bond (sec. 141(e)). The definition of exempt facility bond includes bonds issued to finance certain transportation facilities (airports, ports, mass commuting, and high-speed intercity rail facilities); qualified residential rental projects; privately owned and/or 

operated utility facilities (sewage, water, solid waste disposal, and 

local district heating and cooling facilities, certain private electric 

and gas facilities, and hydroelectric dam enhancements); public/private educational facilities; qualified green building and sustainable 

design projects; and qualified highway or surface freight transfer 

facilities (sec. 142(a)). 

In most cases, the aggregate volume of these tax-exempt private 

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12Sec. 103(a) and (b)(2). 13Sec. 148. 14Secs. 1397E, 54, and 1400N(1), respectively. 15 In addition, Notice 2006–7 provides that qualified projects include any facility owned by a 

qualified borrower that is functionally related and subordinate to any facility described in section 45(d)(1) through (d)(9) and owned by such qualified borrower. 

posed on bonds issued by issuers within each State. For calendar 

year 2007, the State volume cap, which is indexed for inflation, 

equals $85 per resident of the State, or $256.24 million, if greater. 

Arbitrage restrictions 

The tax exemption for State and local bonds does not apply to 

any arbitrage bond.12 An arbitrage bond is defined as any bond 

that is part of an issue if any proceeds of the issue are reasonably 

expected to be used (or intentionally are used) to acquire higher 

yielding investments or to replace funds that are used to acquire 

higher yielding investments.13 In general, arbitrage profits may be 

earned only during specified periods (e.g., defined ‘‘temporary periods’’) before funds are needed for the purpose of the borrowing or 

on specified types of investments (e.g., ‘‘reasonably required reserve 

or replacement funds’’). Subject to limited exceptions, investment 

profits that are earned during these periods or on such investments 

must be rebated to the Federal government. 

Tax credit bonds 

In general 

As an alternative to traditional tax-exempt bonds, the Code permits three types of tax-credit bonds. State and local governments 

have the authority to issue clean renewable energy bonds 

(‘‘CREBS’’), qualified zone academy bonds (‘‘QZABS’’), and ‘‘Gulf tax 

credit bonds.’’ 14

A common feature of the present law tax-credit bonds is that the 

taxpayer holding such a bond receives a tax credit, rather than an 

interest payment. The amount of the credit is determined by multiplying the bond’s credit rate by the face amount on the taxpayer’s 

bond. The credit rate on the bonds is determined by the Secretary 

and is to be a rate that permits issuance of such bonds without discount and interest cost to the qualified issuer. The credit is includible in gross income (as if it were an interest payment on the bond), 

and can be credited against regular income tax liability and alternative minimum tax liability. 

Clean renewable energy bonds 

CREBs are defined as any bond issued by a qualified issuer if, 

in addition to the requirements discussed below, 95 percent or 

more of the proceeds of such bonds are used to finance capital expenditures incurred by qualified borrowers for qualified projects. 

‘‘Qualified projects’’ are facilities that qualify for the tax credit 

under section 45 (other than Indian coal production facilities), 

without regard to the placed-in-service date requirements of that 

section.15 The term ‘‘qualified issuers’’ includes: (1) governmental 

bodies (including Indian tribal governments); (2) mutual or cooperative electric companies (described in section 501(c)(12) or section 

1381(a)(2)(C), or a not-for-profit electric utility which has received 

a loan or guarantee under the Rural Electrification Act); and (3) 


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clean renewable energy bond lenders. The term ‘‘qualified borrower’’ includes a governmental body (including an Indian tribal 

government) and a mutual or cooperative electric company. A clean 

renewable energy bond lender means a cooperative which is owned 

by, or has outstanding loans to, 100 or more cooperative electric 

companies and which was in existence on February 1, 2002. 

In addition to the above requirements, at least 95 percent of the 

proceeds of CREBs must be spent on qualified projects within the 

five-year period that begins on the date of issuance. To the extent 

less than 95 percent of the proceeds are used to finance qualified 

projects during the five-year spending period, bonds will continue 

to qualify as CREBs if unspent proceeds are used within 90 days 

from the end of such five-year period to redeem any ‘‘nonqualified 

bonds.’’ The five-year spending period may be extended by the Secretary upon the qualified issuer’s request demonstrating that the 

failure to satisfy the five-year requirement is due to reasonable 

cause and the projects will continue to proceed with due diligence. 

CREBs also are subject to the arbitrage requirements of section 

148 that apply to tax-exempt bonds. Principles under section 148 

and the regulations thereunder apply for purposes of determining 

the yield restriction and arbitrage rebate requirements applicable 

to CREBs. 

Issuers of CREBs are required to report issuance to the IRS in 

a manner similar to the information returns required for tax-exempt bonds. There is a national CREB limitation of $1.2 billion. 

The maximum amount of CREBs that may be allocated to qualified 

projects of governmental bodies is $750 million. CREBs must be 

issued before January 1, 2009. 

Qualified zone academy bonds 

‘‘QZABs’’ are defined as any bond issued by a State or local government, provided that (1) at least 95 percent of the proceeds are 

used for the purpose of renovating, providing equipment to, developing course materials for use at, or training teachers and other 

school personnel in a ‘‘qualified zone academy,’’ and (2) private entities have promised to contribute to the qualified zone academy 

certain equipment, technical assistance or training, employee services, or other property or services with a value equal to at least 10 

percent of the bond proceeds. Eligible holders of QZABs are limited 

to financial institutions. 

An issuer of QZABs must reasonably expect to and actually 

spend 95 percent or more of the proceeds of such bonds on qualified 

zone academy property within the five-year period that begins on 

the date of issuance. To the extent less than 95 percent of the proceeds are used to finance qualified zone academy property during 

the five-year spending period, bonds will continue to qualify as 

QZABs if unspent proceeds are used within 90 days from the end 

of such five-year period to redeem any nonqualified bonds. For 

these purposes, the amount of nonqualified bonds is to be determined in the same manner as Treasury regulations under section 

142. The provision provides that the five-year spending period may 

be extended by the Secretary if the issuer establishes that the failure to meet the spending requirement is due to reasonable cause 

and the related purposes for issuing the bonds will continue to proceed with due diligence. 


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A total of $400 million of qualified zone academy bonds is authorized to be issued annually in calendar years 1998 through 2007. 

The $400 million aggregate bond cap is allocated to the States according to their respective populations of individuals below the poverty line. Each State, in turn, allocates the credit authority to 

qualified zone academies within such State. 

Issuers of QZABs are required to report issuance to the IRS in 

a manner similar to the information returns required for tax-exempt bonds. In addition, QZABs are subject to the arbitrage requirements of section 148 that apply to tax-exempt bonds. Principles under section 148 and the regulations thereunder apply for 

purposes of determining the yield restriction and arbitrage rebate 

requirements applicable to QZABs. 

Gulf tax credit bonds 

Gulf tax credit bonds were authorized for issuance by the States 

of Louisiana, Mississippi, and Alabama in calendar year 2006. To 

qualify as Gulf tax credit bonds, 95 percent or more of the proceeds 

of such bonds must be used to (i) pay principal, interest, or premium on a bond (other than a private activity bond) that was outstanding on August 28, 2005, and was issued by the State issuing 

the Gulf tax credit bonds, or any political subdivision thereof, or (ii) 

make a loan to any political subdivision of such State to pay principal, interest, or premium on a bond issued by such political subdivision. 

The maximum amount of Gulf tax credit bonds authorized to be 

issued was $200 million in the case of Louisiana, $100 million in 

the case of Mississippi, and $50 million in the case of Alabama. As 

with CREBs and QZABs, issuers of Gulf tax credit bonds are required to report issuance to the IRS in a manner similar to the information returns required for tax-exempt bonds. 

REASONS FOR CHANGE

Many local communities have seen a significant decline in the 

number of individuals employed in manufacturing and are struggling with high concentrations of abandoned or underutilized manufacturing facilities. The Committee believes that additional incentives are needed to assist those communities impacted by the manufacturing jobs crisis. The Committee also believes that State and 

local governments often are in the best position to assess redevelopment needs. Thus, the Committee believes it is appropriate to 

empower State and local governments by providing them with access to subsidized financing to help promote infrastructure redevelopment in communities affected by manufacturing job losses. 

EXPLANATION OF PROVISION

The provision creates a new category of tax-credit bonds, ‘‘Manufacturing Redevelopment Tax Credit Bonds.’’ A Manufacturing Redevelopment Tax Credit Bond means any bond if: (1) 100 percent 

of the available project proceeds of the bond are to be used for 

qualified manufacturing redevelopment purposes within the threeyear period that begins on the date of issuance; (2) the bond is not 

a private activity bond (as defined in section 141); and (3) the bond 

is designated as a manufacturing redevelopment bond by the local 

government which nominated the area to which such bond relates. 


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Under the provision, the term ‘‘qualified manufacturing redevelopment purpose’’ means capital expenditures paid or incurred with 

respect to property located in a manufacturing redevelopment zone 

for purposes of promoting development or other economic activity. 

Examples of qualified manufacturing redevelopment purposes include, but are not limited to, expenditures for environmental remediation, improvements to public infrastructure, and construction of 

public facilities. 

The provision defines ‘‘available project proceeds’’ as proceeds 

from the sale of an issue of Manufacturing Redevelopment Tax 

Credit Bonds, less issuance costs (not to exceed two percent) and 

any investment earnings on such sale proceeds. To the extent less 

than 100 percent of the available project proceeds are used to finance qualified manufacturing redevelopment purposes during the 

three-year spending period, bonds will continue to qualify as Manufacturing Redevelopment Tax Credit Bonds if outstanding bonds 

are redeemed within 90 days from the end of such three-year period. The three-year spending period may be extended by the Secretary upon the issuer’s request demonstrating that the failure to 

satisfy the three-year requirement is due to reasonable cause and 

the projects will continue to proceed with due diligence. 

Manufacturing Redevelopment Tax Credit Bonds generally are 

subject to the arbitrage requirements of section 148. However, 

available project proceeds invested during the three-year spending 

period are not subject to the arbitrage restrictions (i.e., yield restriction and rebate requirements). In addition, amounts invested 

in a reserve fund are not subject to the arbitrage restrictions to the 

extent: (1) such fund is funded at a rate not more rapid than equal 

annual installments; (2) such fund is funded in a manner such that 

the fund will not exceed the amount necessary to repay the issue 

if invested at the average annual interest rate of tax-exempt obligations having a term of 10 years or more that are issued during 

the month the Manufacturing Redevelopment Bonds are issued; 

and (3) the yield on such fund is not greater than the average annual interest rate of tax-exempt obligations having a term of 10 

years or more that are issued during the month the Manufacturing 

Redevelopment Tax Credit Bonds are issued. 

The maturity of Manufacturing Redevelopment Tax Credit Bonds 

is the term that the Secretary estimates will result in the present 

value of the obligation to repay the principal on such bonds being 

equal to 50 percent of the face amount of such bonds, using as a 

discount rate the average annual interest rate of tax-exempt obligations having a term of 10 years or more that are issued during the 

month the Manufacturing Redevelopment Tax Credit Bonds are 

issued. 

As with present-law tax credit bonds, the taxpayer holding Manufacturing Redevelopment Tax Credit Bonds on a credit allowance 

date is entitled to a tax credit. The credit rate on the bonds is determined by the Secretary to be a rate that permits issuance of the 

bonds without discount and interest cost to the qualified issuer. 

The amount of the tax credit to the holder is determined by multiplying the bond’s credit rate by the face amount on the holder’s 

bond. The credit accrues quarterly, is includible in gross income (as 

if it were an interest payment on the bond), and can be credited 

against regular income tax liability and alternative minimum tax 


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liability. Unused credits in one year may be carried forward to succeeding taxable years. 

Under the provision, the maximum aggregate face amount of 

Manufacturing Redevelopment Tax Credit Bonds that can be 

issued in any manufacturing redevelopment zone is $150 million. 

EFFECTIVE DATE

The provision is effective for bonds issued after December 31, 

2007. 

MANUFACTURING REDEVELOPMENT ZONE PRIVATE ACTIVITY BONDS

(SEC. 401 OF THE BILL AND NEW SEC. 1400U–4 OF THE CODE) 

PRESENT LAW

In general 

Under present law, gross income does not include interest on 

State or local bonds (sec. 103). State and local bonds are classified 

generally as either governmental bonds or private activity bonds. 

Governmental bonds are bonds which are primarily used to finance 

governmental functions or are repaid with governmental funds. 

Private activity bonds are bonds with respect to which the State or 

local government serves as a conduit providing financing to nongovernmental persons (e.g., private businesses or individuals). The 

exclusion from income for State and local bonds does not apply to 

private activity bonds, unless the bonds are issued for certain permitted purposes (‘‘qualified private activity bonds’’). 

Qualified private activity bonds 

Qualified private activity bonds permit States or local governments to act as conduits providing tax-exempt financing for certain 

private activities. The definition of qualified private activity bonds 

includes an exempt facility bond, or qualified mortgage, veterans’

mortgage, small issue, redevelopment, 501(c)(3), or student loan 

bond (sec. 141(e)). 

The definition of an exempt facility bond includes bonds issued 

to finance certain transportation facilities (airports, ports, mass 

commuting, and high-speed intercity rail facilities); qualified residential rental projects; privately owned and/or operated utility facilities (sewage, water, solid waste disposal, and local district heating and cooling facilities, certain private electric and gas facilities, 

and hydroelectric dam enhancements); public/private educational 

facilities; qualified green building and sustainable design projects; 

and qualified highway or surface freight transfer facilities (sec. 

142(a)). 

In most cases, the aggregate volume of qualified private activity 

bonds is restricted by annual aggregate volume limits imposed on 

bonds issued by issuers within each State (‘‘State volume cap’’). For 

calendar year 2007, the State volume cap, which is indexed for inflation, equals $85 per resident of the State, or $256.24 million, if 

greater. Exceptions to the State 46 volume cap are provided for 

bonds for certain governmentally owned facilities (e.g., airports, 

ports, high-speed intercity rail, and solid waste disposal) and bonds 

which are subject to separate local, State, or national volume limits 

(e.g., public/private educational facility bonds, enterprise zone facilVerDate Aug 31 2005 07:39 Oct 30, 2007 Jkt 069006 PO 00000 Frm 00081 Fmt 6659 Sfmt 6602 E:\HR\OC\HR414P1.XXX HR414P1

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16The ‘‘Gulf Opportunity Zone’’ is defined as that portion of the Hurricane Katrina Disaster 

Area determined by the President to warrant individual or individual and public assistance from 

the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance 

Act by reason of Hurricane Katrina. 

ity bonds, qualified green building bonds, and qualified highway or 

surface freight transfer facility bonds). 

Qualified private activity bonds generally are subject to restrictions on the use of proceeds for the acquisition of land and existing 

property. In addition, qualified private activity bonds generally are 

subject to restrictions on the use of proceeds to finance certain 

specified facilities (e.g., airplanes, skyboxes, other luxury boxes, 

health club facilities, gambling facilities, and liquor stores), and 

use of proceeds to pay costs of issuance (e.g., bond counsel and underwriter fees). Small issue and redevelopment bonds also are subject to additional restrictions on the use of proceeds for certain facilities (e.g., golf courses and massage parlors). 

Moreover, the term of qualified private activity bonds generally 

may not exceed 120 percent of the economic life of the property 

being financed and certain public approval requirements (similar to 

requirements that typically apply under State law to issuance of 

governmental debt) apply under Federal law to issuance of private 

activity bonds. 

New York Liberty Zone Bonds 

Present law permits an aggregate of $8 billion in exempt facility 

bonds for the purpose of financing the construction and rehabilitation of nonresidential real property and residential rental real 

property in a designated ‘‘Liberty Zone’’ (the ‘‘Zone’’) of New York 

City (‘‘Liberty Zone bonds’’). The Zone consists of all business addresses located on or south of Canal Street, East Broadway (east 

of its intersection with Canal Street), or Grand Street (east of its 

intersection with East Broadway) in the Borough of Manhattan. 

Property eligible for financing with these bonds includes buildings and their structural components, fixed tenant improvements, 

and public utility property (e.g., gas, water, electric, and telecommunication lines). Fixtures and equipment that could be removed from the designated zone for use elsewhere are not eligible 

for financing with these bonds. Issuance of these bonds is limited 

to projects approved by the Mayor of New York City or the Governor of New York State, each of whom may designate up to $4 billion of the aggregate bond authority. 

Liberty Zone Bonds must be issued before January 1, 2010, and 

are not subject to the State volume cap. 

Gulf Opportunity Zone Bonds 

Present law permits the issuance of qualified private activity 

bonds to finance the construction and rehabilitation of residential 

and nonresidential property located in the Gulf Opportunity Zone 

(‘‘Gulf Opportunity Zone Bonds’’).16 Gulf Opportunity Zone Bonds 

must be issued before January 1, 2011. 

Gulf Opportunity Zone Bonds may be issued by the State of Alabama, Louisiana, or Mississippi, or any political subdivision thereof. Gulf Opportunity Zone Bonds are not subject to the State volume cap. Rather, the maximum aggregate face amount of Gulf Opportunity Zone Bonds that may be issued in any State is limited 


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to $2,500 multiplied by the population of the respective State within the Gulf Opportunity Zone. Depending on the purpose for which 

such bonds are issued, Gulf Opportunity Zone Bonds are treated as 

either exempt facility bonds or qualified mortgage bonds. 

Gulf Opportunity Zone Bonds are treated as exempt facility 

bonds if 95 percent or more of the net proceeds of such bonds are 

to be used for qualified project costs located in the Gulf Opportunity Zone. Qualified project costs include the cost of acquisition, 

construction, reconstruction, and renovation of nonresidential real 

property, qualified residential rental projects (as defined in section 

142(d) with certain modifications), and public utility property. 

Empowerment zones 

The Omnibus Budget Reconciliation Act of 1993 authorized the 

designation of nine empowerment zones to provide tax incentives 

for businesses to locate within targeted areas (1391(b)(2)). The Taxpayer Relief Act of 1997 authorized the designation of 22 additional 

empowerment zones (1391(g)(1)). The Community Renewal Tax Relief Act of 2000 authorized the designation of nine new empowerment zones (bringing the total to 40 empowerment zones) (1391(h)). 

To be designated as an empowerment zone, the nominated area 

must satisfy certain size, population, and poverty criteria (that 

vary depending on whether the area is urban or rural). 

The 40 empowerment zones permit businesses located in the empowerment zones to qualify for a number of tax incentives, including expanded tax-exempt private activity bond authority to finance 

certain depreciable property in an empowerment zone. The tax incentives with respect to the empowerment zones generally are 

available through December 31, 2009. 

REASONS FOR CHANGE

The Committee believes that additional tax incentives are needed 

to encourage economic redevelopment in those communities adversely affected by the manufacturing job losses. The Committee 

also believes that State and local governments often are in the best 

position to determine the mix of private investment that will best 

assist a community’s redevelopment. Thus, the Committee believes 

it is appropriate to provide State and local governments with additional tools to encourage private investment in those communities 

affected by manufacturing job losses by expanding access to tax-exempt bond financing in such communities. 

EXPLANATION OF PROVISION

The provision creates a new category of qualified private activity 

bonds, ‘‘Manufacturing Redevelopment Zone Bonds.’’ A Manufacturing Redevelopment Zone Bond means any bond issued as part 

of an issue if: (1) 95 percent or more of the net proceeds of such 

issue are to be used for manufacturing zone property and (2) the 

bond is designated as a Manufacturing Redevelopment Zone Bond 

by the local government which nominated the area to which such 

bond relates. 

Under the provision, the term ‘‘manufacturing zone property’’

means any property subject to depreciation (to which section 168 

applies) if (1) such property was acquired by the taxpayer by purchase after the date on which the designation of the manufacturing 


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redevelopment zone took effect; (2) the original use of such property 

in the manufacturing redevelopment zone commences with the taxpayer; and (3) substantially all of the use of such property is in the 

manufacturing redevelopment zone and is in the active conduct of 

a qualified business by the taxpayer in such zone. The term ‘‘qualified business’’ means any trade or business except that the rental 

to others of real property located in a manufacturing redevelopment zone shall be treated as a qualified business only if the property is not residential rental property (as defined in section 

168(e)(2)). 

Subject to the following exceptions and modifications, issuance of 

Manufacturing Redevelopment Zone Bonds is subject to the general 

rules applicable to issuance of qualified private activity bonds: 

(1) Issuance of the bonds is not subject to the aggregate annual State private activity bond volume limits (sec. 146); 

(2) The restriction on acquisition of existing property does 

not apply (sec. 147(d)), unless such acquisition is inconsistent 

with the definition of manufacturing zone property; 

(3) Interest on the bonds is not a preference item for purposes of the alternative minimum tax preference for private activity bond interest (sec. 57(a)(5)); and 

(4) No portion of the proceeds of the bonds may be used to 

provide any property described in section 144(c)(6)(B) (i.e., any 

private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack or other facility 

used for gambling, or any store the principal purpose of which 

is the sale alcoholic beverages for consumption off premises). 

Under the provision, the maximum aggregate face amount of 

Manufacturing Redevelopment Zone Bonds that can be issued in 

any manufacturing redevelopment zone is $230 million. In addition, the amount of Manufacturing Redevelopment Zone Bonds that 

can be allocated to any person cannot exceed (1) $15 million in any 

one manufacturing redevelopment zone or (2) $20 million in all 

manufacturing redevelopment zones. 

EFFECTIVE DATE

The provision is effective for bonds issued after December 31, 

2007. 

INCREASE THE LOW-INCOME HOUSING CREDIT CAP FOR MANUFACTURING REDEVELOPMENT ZONES (SEC. 401 OF THE BILL AND SEC. 

42 OF THE CODE) 

PRESENT LAW

In general 

The low-income housing credit may be claimed over a 10–year 

period for the cost of rental housing occupied by tenants having incomes below specified levels. The amount of the credit for any taxable year in the credit period is the applicable percentage of the 

qualified basis of each qualified low-income building. The qualified 

basis of any qualified low-income building for any taxable year 

equals the applicable fraction of the eligible basis of the building. 

The credit percentage for newly constructed or substantially rehabilitated housing that is not Federally subsidized is adjusted 


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monthly by the Internal Revenue Service so that the 10 annual installments have a present value of 70 percent of the total qualified 

basis. The credit percentage for newly constructed or substantially 

rehabilitated housing that is Federally subsidized and for existing 

housing that is substantially rehabilitated is calculated to have a 

present value of 30 percent of qualified basis. These are referred 

to as the 70–percent credit and 30–percent credit, respectively. 

Credit cap 

Generally, the aggregate credit authority provided annually to 

each State for calendar year 2007 is $1.95 per resident with a minimum annual cap of $2,275,000 for certain small population States. 

These amounts are indexed for inflation. These limits do not apply 

in the case of projects that also receive financing with proceeds of 

tax-exempt bonds issued subject to the private activity bond volume limit. 

Stacking rule 

Authority to allocate credits remains at the State (as opposed to 

local) government level unless State law provides otherwise. Generally, credits may be allocated only from volume authority arising 

during the calendar year in which the building is placed in service, 

except in the case of: (1) credits claimed on additions to qualified 

basis; (2) credits allocated in a later year pursuant to an earlier 

binding commitment made no later than the year in which the 

building is placed in service; and (3) carryover allocations. 

Each State annually receives low-income housing credit authority 

equal to $1.90 per State resident for allocation to qualified low-income projects. In addition to this $1.90 per resident amount, each 

State’s ‘‘housing credit ceiling’’ includes the following amounts: (1) 

the unused State housing credit ceiling (if any) of such State for 

the preceding calendar year; (2) the amount of the State housing 

credit ceiling (if any) returned in the calendar year; and (3) the 

amount of the national pool (if any) allocated to such State by the 

Treasury Department. 

The national pool consists of States’ unused housing credit 

carryovers. For each State, the unused housing credit carryover for 

a calendar year consists of the excess (if any) of the unused State 

housing credit ceiling for such year over the excess (if any) of the 

aggregate housing credit dollar amount allocated for such year over 

the sum of $1.90 per resident and the credit returns for such year. 

The amounts in the national pool are allocated only to States that 

allocated their entire housing credit ceiling for the preceding calendar year and requested a share in the national pool not later 

than May 1 of the calendar year. The national pool allocation to 

qualified States is made on a pro rata basis equivalent to the fraction that a State’s population enjoys relative to the total population 

of all qualified States for that year. 

The present-law stacking rule provides that each State is treated 

as using its allocation of the unused State housing credit ceiling (if 

any) from the preceding calendar before the current year’s allocation of credit (including any credits returned to the State) and then 

finally any national pool allocations. 


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REASONS FOR CHANGE

The Committee believes that any integrated response to the economic issues inherent in manufacturing redevelopment zones must 

include a proposal to provide adequate rental housing for residents. 

The low-income housing credit is a successful model and should 

serve ably to foster additional low-income rental housing in these 

zones. 

EXPLANATION OF PROVISION

Credit cap 

Under the bill, the Secretary of the Treasury may designate a 

specified number of manufacturing redevelopment zones subject to 

an overall population cap. 

While a designation of a manufacturing redevelopment zone is in 

effect (up to 10 years beginning with the calendar year in which 

the designation goes into effect) a State’s otherwise applicable 

housing credit ceiling is increased by the manufacturing zone housing amount for each manufacturing redevelopment zone located 

within such State. The manufacturing zone housing amount equals 

$20 times the number of such State’s residents within the manufacturing redevelopment zone: For purposes of the manufacturing 

zone housing amount, the determination of population for any calendar year is made on the basis of the most recent census estimate. 

The amount of the State’s increase in the otherwise applicable 

housing credit ceiling is the lesser of: (a) the actual housing credit 

dollar amount allocated from the State housing credit agency to 

buildings located in the manufacturing redevelopment zone for a 

calendar year; or (b) the aggregate manufacturing zone housing 

amount for that manufacturing redevelopment zone minus all the 

increases under this proposal in the State’s ceiling in previous calendar years of that manufacturing redevelopment zone’s designation. 

Any subsequent returns (from the developer to the State housing 

credit agency) of a credit allocation from the manufacturing zone 

housing amount are eligible to be reallocated under this special 

rule but are not treated as returns under the otherwise applicable 

housing credit ceiling. 

EFFECTIVE DATE

The provisions are generally effective for calendar years beginning after 2007. 

EXPANSION OF THE WORK OPPORTUNITY TAX CREDIT (SEC. 401 OF

THE BILL AND SEC. 51 OF THE CODE) 

PRESENT LAW

In general 

The work opportunity tax credit is available on an elective basis 

for employers hiring individuals from one or more of nine targeted 

groups. The amount of the credit available to an employer is determined by the amount of qualified wages paid by the employer. Generally, qualified wages consist of wages attributable to service rendered by a member of a targeted group during the one-year period 


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17For these purposes, members of a family are defined to include only those individuals taken 

into account for purposes of determining eligibility for a food stamp program under the Food 

Stamp Act of 1977. 18 Being entitled to compensation for a service-connected disability is defined with reference 

to section 101 of Title 38, U.S.C., which means having a disability rating of 10-percent or higher 

for service connected injuries. 

beginning with the day the individual begins work for the employer 

(two years in the case of an individual in the long-term family assistance recipient category). 

Targeted groups eligible for the credit 

Generally an employer is eligible for the credit only for qualified 

wages paid to members of a targeted group. 

(1) Families receiving TANF 

An eligible recipient is an individual certified by a designated 

local employment agency (e.g., a State employment agency) as 

being a member of a family eligible to receive benefits under the 

Temporary Assistance for Needy Families Program (‘‘TANF’’) for a 

period of at least nine months, part of which is during the 18- 

month period ending on the hiring date. For these purposes, members of the family are defined to include only those individuals 

taken into account for purposes of determining eligibility for the 

TANF. 

(2) Qualified veteran 

A qualified veteran is a veteran who is certified by the designated local agency: (1) as a member of a family certified as receiving assistance under a food stamp program under the Food 

Stamp Act of 1977 for a period of at least three months, part of 

which is during the 12-month period ending on the hiring date; 17

or (2) as entitled to compensation for a service-connected disability 

and: (a) having a hiring date which is not more than one year after 

having been discharged or released from active duty in the Armed 

Forces of the United States, or (b) having been unemployed for six 

months or more (whether or not consecutive) during the one-year 

period ending on the date of hiring.18

For these purposes, a veteran is an individual who has served on 

active duty (other than for training) in the Armed Forces for more 

than 180 days or who has been discharged or released from active 

duty in the Armed Forces for a service-connected disability. However, any individual who has served for a period of more than 90 

days during which the individual was on active duty (other than 

for training) is not a qualified veteran if any of this active duty occurred during the 60-day period ending on the date the individual 

was hired by the employer. This latter rule is intended to prevent 

employers who hire current members of the armed services (or 

those departed from service within the last 60 days) from receiving 

the credit. 

(3) Qualified ex-felon 

A qualified ex-felon is an individual certified as: (1) having been 

convicted of a felony under any State or Federal law, and (2) having a hiring date within one year of release from prison or date of 

conviction. 


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(4) Designated community residents 

A designated community resident is an individual certified as 

being at least age 18 but not yet age 40 on the hiring date and as 

having a principal place of abode within an empowerment zone, renewal community (as defined under Subchapter U of Subtitle A, 

Chapter 1 of the Code) or rural renewal county (defined as a county 

outside a metropolitan statistical area (as defined by the Office of 

Management and Budget) which had a net population loss during 

the five-year periods 1990–1994 and 1995–1999). Qualified wages 

do not include wages paid or incurred for services performed after 

the individual moves outside an empowerment zone, renewal community, or rural renewal community. 

(5) Vocational rehabilitation referral 

A vocational rehabilitation referral is an individual who is certified by a designated local agency as an individual who has a 

physical or mental disability that constitutes a substantial handicap to employment and who has been referred to the employer 

while receiving, or after completing: (a) vocational rehabilitation 

services under an individualized, written plan for employment 

under a State plan approved under the Rehabilitation Act of 1973; 

(b) a rehabilitation plan for veterans carried out under Chapter 31 

of Title 38, U.S. Code; or (c) an individual work plan developed and 

implemented by an employment network pursuant to subsection (g) 

of section 1148 of the Social Security Act with respect to which the 

requirements of such subsection are met. Certification will be provided by the designated local employment agency upon assurances 

from the vocational rehabilitation agency that the employee has 

met the above conditions. 

(6) Qualified summer youth employee 

A qualified summer youth employee is an individual: (1) Who 

performs services during any 90-day period between May 1 and 

September 15, (2) who is certified by the designated local agency 

as being 16 or 17 years of age on the hiring date, (3) who has not 

been an employee of that employer before, and (4) who is certified 

by the designated local agency as having a principal place of abode 

within an empowerment zone, enterprise community, or renewal 

community (as defined under Subchapter U of Subtitle A, Chapter 

1 of the Code. As with high-risk youths, no credit is available on 

wages paid or incurred for service performed after the qualified 

summer youth moves outside of an empowerment zone, enterprise 

community, or renewal community. If, after the end of the 90-day 

period, the employer continues to employ a youth who was certified 

during the 90-day period as a member of another targeted group, 

the limit on qualified first year wages will take into account wages 

paid to the youth while a qualified summer youth employee. 

(7) Qualified food stamp recipient 

A qualified food stamp recipient is an individual aged 18 but not 

yet 40 certified by a designated local employment agency as being 

a member of a family receiving assistance under a food stamp program under the Food Stamp Act of 1977 for a period of at least six 

months ending on the hiring date. In the case of families that cease 

to be eligible for food stamps under section 6(o) of the Food Stamp 


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19The welfare-to-work tax credit was consolidated into the work opportunity tax credit in the 

Tax Relief and Health Care Act of 2006 for qualified individuals who begin to work for an employer after December 31, 2006. 

Act of 1977, the six-month requirement is replaced with a requirement that the family has been receiving food stamps for at least 

three of the five months ending on the date of hire. For these purposes, members of the family are defined to include only those individuals taken into account for purposes of determining eligibility 

for a food stamp program under the Food Stamp Act of 1977. 

(8) Qualified SSI recipient 

A qualified SSI recipient is an individual certified by a designated local agency as receiving supplemental security income 

(‘‘SSI’’) benefits under Title XVI of the Social Security Act for any 

month ending within the 60-day period ending on the hiring date. 

(9) Long-term family assistance recipients 

A qualified long-term family assistance recipient is an individual 

certified by a designated local agency as being: (1) a member of a 

family that has received family assistance for at least 18 consecutive months ending on the hiring date; (2) a member of a family 

that has received such family assistance for a total of at least 18 

months (whether or not consecutive) after August 5, 1997 (the date 

of enactment of the welfare-to-work tax credit) 19 if the individual 

is hired within two years after the date that the 18-month total is 

reached; or (3) a member of a family who is no longer eligible for 

family assistance because of either Federal or State time limits, if 

the individual is hired within two years after the Federal or State 

time limits made the family ineligible for family assistance. 

Qualified wages 

Generally, qualified wages are defined as cash wages paid by the 

employer to a member of a targeted group. The employer’s deduction for wages is reduced by the amount of the credit. 

For purposes of the credit, generally, wages are defined by reference to the FUTA definition of wages contained in sec. 3306(b) 

(without regard to the dollar limitation therein contained). Special 

rules apply in the case of certain agricultural labor and certain 

railroad labor. 

Calculation of the credit 

The credit available to an employer for qualified wages paid to 

members of all targeted groups except for long-term family assistance recipients equals 40 percent (25 percent for employment of 

400 hours or less) of qualified first-year wages. Generally, qualified 

first-year wages are qualified wages (not in excess of $6,000) attributable to service rendered by a member of a targeted group during 

the one-year period beginning with the day the individual began 

work for the employer. Therefore, the maximum credit per employee is $2,400 (40 percent of the first $6,000 of qualified firstyear wages). There are two exceptions to this general rule. First, 

with respect to qualified summer youth employees, the maximum 

credit is $1,200 (40 percent of the first $3,000 of qualified first-year 

wages). Second, with respect to qualified veterans who are entitled 

to compensation for a service-connected disability, the maximum 


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20The expanded definition of qualified first-year wages does not apply to the veterans qualified with reference to a food stamp program, as defined under present law. 

credit is $4,800 because qualified first-year wages are $12,000 rather than $6,000 for such individuals.20 Except for long-term family 

assistance recipients, no credit is allowed for second-year wages. 

In the case of long-term family assistance recipients, the credit 

equals 40 percent (25 percent for employment of 400 hours or less) 

of $10,000 for qualified first-year wages and 50 percent of the first 

$10,000 of qualified second-year wages. Generally, qualified secondyear wages are qualified wages (not in excess of $10,000) attributable to service rendered by a member of the long-term family assistance category during the one-year period beginning on the day 

after the one-year period beginning with the day the individual 

began work for the employer. Therefore, the maximum credit per 

employee is $9,000 (40 percent of the first $10,000 of qualified firstyear wages plus 50 percent of the first $10,000 of qualified secondyear wages). 

Certification rules 

An individual is not treated as a member of a targeted group unless: (1) on or before the day on which an individual begins work 

for an employer, the employer has received a certification from a 

designated local agency that such individual is a member of a targeted group; or (2) on or before the day an individual is offered employment with the employer, a pre-screening notice is completed by 

the employer with respect to such individual, and not later than 

the 28th day after the individual begins work for the employer, the 

employer submits such notice, signed by the employer and the individual under penalties of perjury, to the designated local agency as 

part of a written request for certification. For these purposes, a 

pre-screening notice is a document (in such form as the Secretary 

may prescribe) which contains information provided by the individual on the basis of which the employer believes that the individual is a member of a targeted group. 

Minimum employment period 

No credit is allowed for qualified wages paid to employees who 

work less than 120 hours in the first year of employment. 

Other rules 

The work opportunity tax credit is not allowed for wages paid to 

a relative or dependent of the taxpayer. No credit is allowed for 

wages paid to an individual who is a more than fifty-percent owner 

of the entity. Similarly, wages paid to replacement workers during 

a strike or lockout are not eligible for the work opportunity tax 

credit. Wages paid to any employee during any period for which the 

employer received on-the-job training program payments with respect to that employee are not eligible for the work opportunity tax 

credit. The work opportunity tax credit generally is not allowed for 

wages paid to individuals who had previously been employed by the 

employer. In addition, many other technical rules apply. 


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21The age limitation otherwise applicable to designated community residents also applies (i.e., 

a resident of a manufacturing redevelopment zone must be an individual certified as being at 

least age 18 but not yet 40 on the hiring date)’’. 22 However, exceptions to the fungibility principle are provided in particular cases, some of 

which are described below. 

Expiration 

The work opportunity tax credit is not available for individuals 

who begin work for an employer after August 31, 2011. 

REASONS FOR CHANGE

The work opportunity tax credit already provides an incentive to 

employers to employ individuals from certain economically depressed areas. Expanding availability of the work opportunity tax 

credit to residents of manufacturing redevelopment zones is a logical part of the package of tax incentives for these zones. This expansion is consistent with the Committee’s belief that any integrated response to the economic issues inherent in manufacturing 

redevelopment zones must include a proposal to encourage employers to offer employment to zone residents. 

EXPLANATION OF PROVISION

The bill adds residents of manufacturing redevelopment zones to 

the category of designated community residents for purposes of the 

work opportunity tax credit.21

EFFECTIVE DATE

The provision is effective for wages paid or incurred for individuals who begin work for an employer after the date of enactment. 

DELAY IMPLEMENTATION OF WORLDWIDE INTEREST ALLOCATION

(SEC. 402 OF THE BILL AND SEC. 864(F) OF THE CODE) 

PRESENT LAW

In general 

In order to compute the foreign tax credit limitation, a taxpayer 

must determine the amount of its taxable income from foreign 

sources. Thus, the taxpayer must allocate and apportion deductions 

between items of U.S.-source gross income, on the one hand, and 

items of foreign-source gross income, on the other. 

In the case of interest expense, the rules generally are based on 

the approach that money is fungible and that interest expense is 

properly attributable to all business activities and property of a 

taxpayer, regardless of any specific purpose for incurring an obligation on which interest is paid.22 For interest allocation purposes, 

all members of an affiliated group of corporations generally are 

treated as a single corporation (the so-called ‘‘one-taxpayer rule’’) 

and allocation must be made on the basis of assets rather than 

gross income. The term ‘‘affiliated group’’ in this context generally 

is defined by reference to the rules for determining whether corporations are eligible to file consolidated returns. 

For consolidation purposes, the term ‘‘affiliated group’’ means one 

or more chains of includible corporations connected through stock 

ownership with a common parent corporation which is an includible corporation, but only if: (1) the common parent owns directly 


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23One such exception is that the affiliated group for interest allocation purposes includes section 936 corporations that are excluded from the consolidated group. 24Pub. L. No. 108–357, sec. 401 (2004). 

stock possessing at least 80 percent of the total voting power and 

at least 80 percent of the total value of at least one other includible 

corporation; and (2) stock meeting the same voting power and value 

standards with respect to each includible corporation (excluding the 

common parent) is directly owned by one or more other includible 

corporations. 

Generally, the term ‘‘includible corporation’’ means any domestic 

corporation except certain corporations exempt from tax under section 501 (for example, corporations organized and operated exclusively for charitable or educational purposes), certain life insurance 

companies, corporations electing application of the possession tax 

credit, regulated investment companies, real estate investment 

trusts, and domestic international sales corporations. A foreign corporation generally is not an includible corporation. 

Subject to exceptions, the consolidated return and interest allocation definitions of affiliation generally are consistent with each 

other.23 For example, both definitions generally exclude all foreign 

corporations from the affiliated group. Thus, while debt generally 

is considered fungible among the assets of a group of domestic affiliated corporations, the same rules do not apply as between the 

domestic and foreign members of a group with the same degree of 

common control as the domestic affiliated group. 

Banks, savings institutions, and other financial affiliates 

The affiliated group for interest allocation purposes generally excludes what are referred to in the Treasury regulations as ‘‘financial corporations’’ (Treas. Reg. sec. 1.861–11T(d)(4)). These include 

any corporation, otherwise a member of the affiliated group for consolidation purposes, that is a financial institution (described in section 581 or section 591), the business of which is predominantly 

with persons other than related persons or their customers, and 

which is required by State or Federal law to be operated separately 

from any other entity which is not a financial institution (sec. 

864(e)(5)(C)). The category of financial corporations also includes, 

to the extent provided in regulations, bank holding companies (including financial holding companies), subsidiaries of banks and 

bank holding companies (including financial holding companies), 

and savings institutions predominantly engaged in the active conduct of a banking, financing, or similar business (sec. 864(e)(5)(D)). 

A financial corporation is not treated as a member of the regular 

affiliated group for purposes of applying the one-taxpayer rule to 

other non-financial members of that group. Instead, all such financial corporations that would be so affiliated are treated as a separate single corporation for interest allocation purposes. 

Worldwide interest allocation 

In general 

The American Jobs Creation Act of 2004 (‘‘AJCA’’) 24 modifies the 

interest expense allocation rules described above (which generally 

apply for purposes of computing the foreign tax credit limitation) 

by providing a one-time election (the ‘‘worldwide affiliated group 


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25For purposes of determining the assets of the worldwide affiliated group, neither stock in 

corporations within the group nor indebtedness (including receivables) between members of the 

group is taken into account. 26 Although the interest expense of a foreign subsidiary is taken into account for purposes of 

allocating the interest expense of the domestic members of the electing worldwide affiliated 

group for foreign tax credit limitation purposes, the interest expense incurred by a foreign subsidiary is not deductible on a U.S. return. 27 Indirect ownership is determined under the rules of section 958(a)(2) or through applying 

rules similar to those of section 958(a)(2) to stock owned directly or indirectly by domestic partnerships, trusts, or estates. 

election’’) under which the taxable income of the domestic members 

of an affiliated group from sources outside the United States generally is determined by allocating and apportioning interest expense of the domestic members of a worldwide affiliated group on 

a worldwide-group basis (i.e., as if all members of the worldwide 

group were a single corporation). If a group makes this election, the 

taxable income of the domestic members of a worldwide affiliated 

group from sources outside the United States is determined by allocating and apportioning the third-party interest expense of those 

domestic members to foreign-source income in an amount equal to 

the excess (if any) of (1) the worldwide affiliated group’s worldwide 

third-party interest expense multiplied by the ratio which the foreign assets of the worldwide affiliated group bears to the total assets of the worldwide affiliated group,25 over (2) the third-party interest expense incurred by foreign members of the group to the extent such interest would be allocated to foreign sources if the principles of worldwide interest allocation were applied separately to 

the foreign members of the group.26

For purposes of the new elective rules based on worldwide 

fungibility, the worldwide affiliated group means all corporations in 

an affiliated group as well as all controlled foreign corporations 

that, in the aggregate, either directly or indirectly,27 would be 

members of such an affiliated group if section 1504(b)(3) did not 

apply (i.e., in which at least 80 percent of the vote and value of the 

stock of such corporations is owned by one or more other corporations included in the affiliated group). Thus, if an affiliated group 

makes this election, the taxable income from sources outside the 

United States of domestic group members generally is determined 

by allocating and apportioning interest expense of the domestic 

members of the worldwide affiliated group as if all of the interest 

expense and assets of 80-percent or greater owned domestic corporations (i.e., corporations that are part of the affiliated group, as 

modified to include insurance companies) and certain controlled 

foreign corporations were attributable to a single corporation. 

The common parent of the domestic affiliated group must make 

the worldwide affiliated group election. It must be made for the 

first taxable year beginning after December 31, 2008, in which a 

worldwide affiliated group exists that includes at least one foreign 

corporation that meets the requirements for inclusion in a worldwide affiliated group. Once made, the election applies to the common parent and all other members of the worldwide affiliated 

group for the taxable year for which the election was made and all 

subsequent taxable years, unless revoked with the consent of the 

Secretary of the Treasury. 


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28See Treas. Reg. sec. 1.904–4(e)(2). 

Financial institution group election 

Taxpayers are allowed to apply the bank group rules to exclude 

certain financial institutions from the affiliated group for interest 

allocation purposes under the worldwide fungibility approach. The 

rules also provides a one-time ‘‘financial institution group’’ election 

that expands the bank group. At the election of the common parent 

of the pre-election worldwide affiliated group, the interest expense 

allocation rules are applied separately to a subgroup of the worldwide affiliated group that consists of (1) all corporations that are 

part of the bank group, and (2) all ‘‘financial corporations.’’ For this 

purpose, a corporation is a financial corporation if at least 80 percent of its gross income is financial services income (as described 

in section 904(d)(2)(C)(i) and the regulations thereunder) that is derived from transactions with unrelated persons.28 For these purposes, items of income or gain from a transaction or series of transactions are disregarded if a principal purpose for the transaction or 

transactions is to qualify any corporation as a financial corporation. 

The common parent of the pre-election worldwide affiliated group 

must make the election for the first taxable year beginning after 

December 31, 2008, in which a worldwide affiliated group includes 

a financial corporation. Once made, the election applies to the financial institution group for the taxable year and all subsequent 

taxable years. In addition, anti-abuse rules are provided under 

which certain transfers from one member of a financial institution 

group to a member of the worldwide affiliated group outside of the 

financial institution group are treated as reducing the amount of 

indebtedness of the separate financial institution group. Regulatory 

authority is provided with respect to the election to provide for the 

direct allocation of interest expense in circumstances in which such 

allocation is appropriate to carry out the purposes of these rules, 

to prevent assets or interest expense from being taken into account 

more than once, or to address changes in members of any group 

(through acquisitions or otherwise) treated as affiliated under these 

rules. 

Effective date of worldwide interest allocation under AJCA 

The worldwide interest allocation rules under AJCA are effective 

for taxable years beginning after December 31, 2008. 

REASONS FOR CHANGE

The Committee believes that it is appropriate to delay implementation of the worldwide interest allocation rules. 

EXPLANATION OF PROVISION

The provision delays the effective date of worldwide interest allocation rules for three years, until taxable years beginning after December 31, 2011. The required dates for making the worldwide affiliated group election and the financial institution group election 

are changed accordingly. 

EFFECTIVE DATE

The provision is effective on the date of enactment. 


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III. VOTES OF THE COMMITTEE 

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the following statements are made concerning the vote of the Committee on Ways and Means in its consideration of H.R. 3920, the ‘‘Trade and Globalization Act of 2007.’’

MOTION TO REPORT RECOMMENDATIONS 

The Chairman’s Amendment in the Nature of a Substitute, as 

amended, was ordered favorably reported by a roll call vote of 26 

yeas to 14 nays (with a quorum being present). The vote was as 

follows: 

Representative Yea Nay Present Representative Yea Nay Present 

Mr. Rangel ............................ X ........... ............. Mr. McCrery .......................... ........... X .............

Mr. Stark ............................... X ........... ............. Mr. Herger ............................ ........... X .............

Mr. Levin ............................... X ........... ............. Mr. Camp ............................. X ........... .............

Mr. McDermott ...................... X ........... ............. Mr. Ramstad ........................ ........... X .............

Mr. Lewis (GA) ...................... X ........... ............. Mr. Johnson .......................... ........... X .............

Mr. Neal ................................ X ........... ............. Mr. English ........................... X ........... .............

Mr. McNulty ........................... X ........... ............. Mr. Weller ............................. ........... X .............

Mr. Tanner ............................ X ........... ............. Mr. Hulshof .......................... ........... X .............

Mr. Becerra ........................... X ........... ............. Mr. Lewis (KY) ...................... ........... X .............

Mr. Doggett ........................... X ........... ............. Mr. Brady ............................. ........... X .............

Mr. Pomeroy .......................... X ........... ............. Mr. Reynolds ........................ X ........... .............

Ms. Tubbs Jones ................... X ........... ............. Mr. Ryan ............................... ........... X .............

Mr. Thompson ....................... X ........... ............. Mr. Cantor ............................ ........... X .............

Mr. Larson ............................. X ........... ............. Mr. Linder ............................. ........... X .............

Mr. Emanuel ......................... X ........... ............. Mr. Nunes ............................. ........... X .............

Mr. Blumenauer .................... X ........... ............. Mr. Tiberi .............................. ........... X .............

Mr. Kind ................................ X ........... ............. Mr. Porter ............................. ........... X .............

Mr. Pascrell ........................... X ........... .............

Ms. Berkley ........................... X ........... .............

Mr. Crowley ........................... X ........... .............

Mr. Van Hollen ...................... X ........... .............

Mr. Meek ............................... X ........... .............

Ms. Schwartz ........................ X ........... .............

Mr. Davis .............................. X ........... .............

VOTES ON AMENDMENTS 

A roll call vote was conducted on the following amendments to 

the Chairman’s Amendment in the Nature of a Substitute. 

An amendment by Mr. Johnson, which would strike the provisions in the Chairman’s amendment in the nature of a substitute 

requiring merit-based staff to administer TAA, was defeated by a 

roll call vote of 16 yeas to 25 nays. The vote was as follows: 

Representative Yea Nay Present Representative Yea Nay Present 

Mr. Rangel ............................ ........... X ............. Mr. McCrery .......................... X ........... .............

Mr. Stark ............................... ........... X ............. Mr. Herger ............................ X ........... .............

Mr. Levin ............................... ........... X ............. Mr. Camp ............................. X ........... .............

Mr. McDermott ...................... ........... X ............. Mr. Ramstad ........................ X ........... .............

Mr. Lewis (GA) ...................... ........... X ............. Mr. Johnson .......................... X ........... .............

Mr. Neal ................................ ........... X ............. Mr. English ........................... ........... X .............

Mr. McNulty ........................... ........... X ............. Mr. Weller ............................. X ........... .............

Mr. Tanner ............................ ........... X ............. Mr. Hulshof .......................... X ........... .............

Mr. Becerra ........................... ........... X ............. Mr. Lewis (KY) ...................... X ........... .............

Mr. Doggett ........................... ........... X ............. Mr. Brady ............................. X ........... .............

Mr. Pomeroy .......................... ........... X ............. Mr. Reynolds ........................ X ........... .............

Ms. Tubbs Jones ................... ........... X ............. Mr. Ryan ............................... X ........... .............

Mr. Thompson ....................... ........... X ............. Mr. Cantor ............................ X ........... .............

Mr. Larson ............................. ........... X ............. Mr. Linder ............................. X ........... .............


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Representative Yea Nay Present Representative Yea Nay Present 

Mr. Emanuel ......................... ........... X ............. Mr. Nunes ............................. X ........... .............

Mr. Blumenauer .................... ........... X ............. Mr. Tiberi .............................. X ........... .............

Mr. Kind ................................ ........... X ............. Mr. Porter ............................. X ........... .............

Mr. Pascrell ........................... ........... X .............

Ms. Berkley ........................... ........... X .............

Mr. Crowley ........................... ........... X .............

Mr. Van Hollen ...................... ........... X .............

Mr. Meek ............................... ........... X .............

Ms. Schwartz ........................ ........... X .............

Mr. Davis .............................. ........... X .............

An amendment by Mr. Weller, which would provide the Secretary of Labor with waiver authority to allow States to use Unemployment Insurance funds for demonstration projects promoting 

rapid reemployment, was defeated by a roll call vote of 17 yeas to 

24 nays. The vote was as follows: 

Representative Yea Nay Present Representative Yea Nay Present 

Mr. Rangel ............................ ........... X ............. Mr. McCrery .......................... X ........... .............

Mr. Stark ............................... ........... X ............. Mr. Herger ............................ X ........... .............

Mr. Levin ............................... ........... X ............. Mr. Camp ............................. X ........... .............

Mr. McDermott ...................... ........... X ............. Mr. Ramstad ........................ X ........... .............

Mr. Lewis (GA) ...................... ........... X ............. Mr. Johnson .......................... X ........... .............

Mr. Neal ................................ ........... X ............. Mr. English ........................... X ........... .............

Mr. McNulty ........................... ........... X ............. Mr. Weller ............................. X ........... .............

Mr. Tanner ............................ ........... X ............. Mr. Hulshof .......................... X ........... .............

Mr. Becerra ........................... ........... X ............. Mr. Lewis (KY) ...................... X ........... .............

Mr. Doggett ........................... ........... X ............. Mr. Brady ............................. X ........... .............

Mr. Pomeroy .......................... ........... X ............. Mr. Reynolds ........................ X ........... .............

Ms. Tubbs Jones ................... ........... X ............. Mr. Ryan ............................... X ........... .............

Mr. Thompson ....................... ........... X ............. Mr. Cantor ............................ X ........... .............

Mr. Larson ............................. ........... X ............. Mr. Linder ............................. X ........... .............

Mr. Emanuel ......................... ........... X ............. Mr. Nunes ............................. X ........... .............

Mr. Blumenauer .................... ........... X ............. Mr. Tiberi .............................. X ........... .............

Mr. Kind ................................ ........... X ............. Mr. Porter ............................. X ........... .............

Mr. Pascrell ........................... ........... X .............

Ms. Berkley ........................... ........... X .............

Mr. Crowley ........................... ........... X .............

Mr. Van Hollen ...................... ........... X .............

Mr. Meek ............................... ........... X .............

Ms. Schwartz ........................ ........... X .............

Mr. Davis .............................. ........... X .............

An amendment by Mr. Ryan, requiring new TAA performance accountability measures, was defeated by a roll call vote of 17 yeas 

to 24 nays. The vote was as follows: 

Representative Yea Nay Present Representative Yea Nay Present 

Mr. Rangel ............................ ........... X ............. Mr. McCrery .......................... X ........... .............

Mr. Stark ............................... ........... X ............. Mr. Herger ............................ X ........... .............

Mr. Levin ............................... ........... X ............. Mr. Camp ............................. X ........... .............

Mr. McDermott ...................... ........... X ............. Mr. Ramstad ........................ X ........... .............

Mr. Lewis (GA) ...................... ........... X ............. Mr. Johnson .......................... X ........... .............

Mr. Neal ................................ ........... X ............. Mr. English ........................... X ........... .............

Mr. McNulty ........................... ........... X ............. Mr. Weller ............................. X ........... .............

Mr. Tanner ............................ ........... X ............. Mr. Hulshof .......................... X ........... .............

Mr. Becerra ........................... ........... X ............. Mr. Lewis (KY) ...................... X ........... .............

Mr. Doggett ........................... ........... X ............. Mr. Brady ............................. X ........... .............

Mr. Pomeroy .......................... ........... X ............. Mr. Reynolds ........................ X ........... .............

Ms. Tubbs Jones ................... ........... X ............. Mr. Ryan ............................... X ........... .............

Mr. Thompson ....................... ........... X ............. Mr. Cantor ............................ X ........... .............

Mr. Larson ............................. ........... X ............. Mr. Linder ............................. X ........... .............

Mr. Emanuel ......................... ........... X ............. Mr. Nunes ............................. X ........... .............

Mr. Blumenauer .................... ........... X ............. Mr. Tiberi .............................. X ........... .............


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Representative Yea Nay Present Representative Yea Nay Present 

Mr. Kind ................................ ........... X ............. Mr. Porter ............................. X ........... .............

Mr. Pascrell ........................... ........... X 

Ms. Berkley ........................... ........... X 

Mr. Crowley ........................... ........... X 

Mr. Van Hollen ...................... ........... X 

Mr. Meek ............................... ........... X 

Ms. Schwartz ........................ ........... X 

Mr. Davis .............................. ........... X 

An amendment by Mr. Reynolds, which would strike the tax 

credit bond provision from the Chairman’s amendment in the nature of a substitute and replace it with a modification of the New 

Markets Tax Credit applicable to trade-affected communities, was 

defeated by a roll call vote of 17 yeas to 24 nays. The vote was as 

follows: 

Representative Yea Nay Present Representative Yea Nay Present 

Mr. Rangel ............................ ........... X ............. Mr. McCrery .......................... X ........... .............

Mr. Stark ............................... ........... X ............. Mr. Herger ............................ X ........... .............

Mr. Levin ............................... ........... X ............. Mr. Camp ............................. X ........... .............

Mr. McDermott ...................... ........... X ............. Mr. Ramstad ........................ X ........... .............

Mr. Lewis (GA) ...................... ........... X ............. Mr. Johnson .......................... X ........... .............

Mr. Neal ................................ ........... X ............. Mr. English ........................... X ........... .............

Mr. McNulty ........................... ........... X ............. Mr. Weller ............................. X ........... .............

Mr. Tanner ............................ ........... X ............. Mr. Hulshof .......................... X ........... .............

Mr. Becerra ........................... ........... X ............. Mr. Lewis (KY) ...................... X ........... .............

Mr. Doggett ........................... ........... X ............. Mr. Brady ............................. X ........... .............

Mr. Pomeroy .......................... ........... X ............. Mr. Reynolds ........................ X ........... .............

Ms. Tubbs Jones ................... ........... X ............. Mr. Ryan ............................... X ........... .............

Mr. Thompson ....................... ........... X ............. Mr. Cantor ............................ X ........... .............

Mr. Larson ............................. ........... X ............. Mr. Linder ............................. X ........... .............

Mr. Emanuel ......................... ........... X ............. Mr. Nunes ............................. X ........... .............

Mr. Blumenauer .................... ........... X ............. Mr. Tiberi .............................. X ........... .............

Mr. Kind ................................ ........... X ............. Mr. Porter ............................. X ........... .............

Mr. Pascrell ........................... ........... X .............

Ms. Berkley ........................... ........... X .............

Mr. Crowley ........................... ........... X .............

Mr. Van Hollen ...................... ........... X .............

Mr. Meek ............................... ........... X .............

Ms. Schwartz ........................ ........... X .............

Mr. Davis .............................. ........... X .............

An amendment by Mr. Herger, which would modify the TAA 

training provisions in the Chairman’s amendment in the nature of 

a substitute, was defeated by a roll call vote of 16 yeas to 24 nays. 

The vote was as follows: 

Representative Yea Nay Present Representative Yea Nay Present 

Mr. Rangel ............................ ........... X ............. Mr. McCrery .......................... X ........... .............

Mr. Stark ............................... ........... X ............. Mr. Herger ............................ X ........... .............

Mr. Levin ............................... ........... X ............. Mr. Camp ............................. X ........... .............

Mr. McDermott ...................... ........... X ............. Mr. Ramstad ........................ X ........... .............

Mr. Lewis (GA) ...................... ........... X ............. Mr. Johnson .......................... X ........... .............

Mr. Neal ................................ ........... X ............. Mr. English ........................... X ........... .............

Mr. McNulty ........................... ........... X ............. Mr. Weller ............................. X ........... .............

Mr. Tanner ............................ ........... X ............. Mr. Hulshof .......................... X ........... .............

Mr. Becerra ........................... ........... X ............. Mr. Lewis (KY) ...................... X ........... .............

Mr. Doggett ........................... ........... X ............. Mr. Brady ............................. X ........... .............

Mr. Pomeroy .......................... ........... X ............. Mr. Reynolds ........................ X ........... .............

Ms. Tubbs Jones ................... ........... X ............. Mr. Ryan ............................... X ........... .............

Mr. Thompson ....................... ........... X ............. Mr. Cantor ............................ X ........... .............

Mr. Larson ............................. ........... X ............. Mr. Linder ............................. X ........... .............

Mr. Emanuel ......................... ........... X ............. Mr. Nunes ............................. ........... ........... .............


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Representative Yea Nay Present Representative Yea Nay Present 

Mr. Blumenauer .................... ........... X ............. Mr. Tiberi .............................. X ........... .............

Mr. Kind ................................ ........... X ............. Mr. Porter ............................. X ........... .............

Mr. Pascrell ........................... ........... X .............

Ms. Berkley ........................... ........... X .............

Mr. Crowley ........................... ........... X .............

Mr. Van Hollen ...................... ........... X .............

Mr. Meek ............................... ........... X .............

Ms. Schwartz ........................ ........... X .............

Mr. Davis .............................. ........... X .............

An amendment by Mr. Herger, which would strike the FUTA 

surtax extension in the Chairman’s amendment in the nature of a 

substitute, was defeated by a roll call vote of 16 yeas to 24 nays. 

The vote was as follows: 

Representative Yea Nay Present Representative Yea Nay Present 

Mr. Rangel ............................ ........... X ............. Mr. McCrery .......................... X ........... .............

Mr. Stark ............................... ........... X ............. Mr. Herger ............................ X ........... .............

Mr. Levin ............................... ........... X ............. Mr. Camp ............................. X ........... .............

Mr. McDermott ...................... ........... X ............. Mr. Ramstad ........................ X ........... .............

Mr. Lewis (GA) ...................... ........... X ............. Mr. Johnson .......................... X ........... .............

Mr. Neal ................................ ........... X ............. Mr. English ........................... X ........... .............

Mr. McNulty ........................... ........... X ............. Mr. Weller ............................. X ........... .............

Mr. Tanner ............................ ........... X ............. Mr. Hulshof .......................... X ........... .............

Mr. Becerra ........................... ........... X ............. Mr. Lewis (KY) ...................... X ........... .............

Mr. Doggett ........................... ........... X ............. Mr. Brady ............................. X ........... .............

Mr. Pomeroy .......................... ........... X ............. Mr. Reynolds ........................ X ........... .............

Ms. Tubbs Jones ................... ........... X ............. Mr. Ryan ............................... X ........... .............

Mr. Thompson ....................... ........... X ............. Mr. Cantor ............................ X ........... .............

Mr. Larson ............................. ........... X ............. Mr. Linder ............................. X ........... .............

Mr. Emanuel ......................... ........... X ............. Mr. Nunes ............................. ........... ........... .............

Mr. Blumenauer .................... ........... X ............. Mr. Tiberi .............................. X ........... .............

Mr. Kind ................................ ........... X ............. Mr. Porter ............................. X ........... .............

Mr. Pascrell ........................... ........... X .............

Ms. Berkley ........................... ........... X .............

Mr. Crowley ........................... ........... X .............

Mr. Van Hollen ...................... ........... X .............

Mr. Meek ............................... ........... X .............

Ms. Schwartz ........................ ........... X .............

Mr. Davis .............................. ........... X .............

An amendment by Mr. McCrery, in the nature of a complete substitute to the Chairman’s amendment in the nature of a substitute, 

was defeated by a roll call vote of 17 yeas to 23 nays. The vote was 

as follows: 

Representative Yea Nay Present Representative Yea Nay Present 

Mr. Rangel ............................ ........... X ............. Mr. McCrery .......................... X ........... .............

Mr. Stark ............................... ........... X ............. Mr. Herger ............................ X ........... .............

Mr. Levin ............................... ........... X ............. Mr. Camp ............................. X ........... .............

Mr. McDermott ...................... ........... X ............. Mr. Ramstad ........................ X ........... .............

Mr. Lewis (GA) ...................... ........... X ............. Mr. Johnson .......................... X ........... .............

Mr. Neal ................................ ........... X ............. Mr. English ........................... X ........... .............

Mr. McNulty ........................... ........... X ............. Mr. Weller ............................. X ........... .............

Mr. Tanner ............................ ........... X ............. Mr. Hulshof .......................... X ........... .............

Mr. Becerra ........................... ........... ........... ............. Mr. Lewis (KY) ...................... X ........... .............

Mr. Doggett ........................... ........... X ............. Mr. Brady ............................. X ........... .............

Mr. Pomeroy .......................... ........... X ............. Mr. Reynolds ........................ X ........... .............

Ms. Tubbs Jones ................... ........... X ............. Mr. Ryan ............................... X ........... .............

Mr. Thompson ....................... ........... X ............. Mr. Cantor ............................ X ........... .............

Mr. Larson ............................. ........... X ............. Mr. Linder ............................. X ........... .............

Mr. Emanuel ......................... ........... X ............. Mr. Nunes ............................. X ........... .............

Mr. Blumenauer .................... ........... X ............. Mr. Tiberi .............................. X ........... .............

Mr. Kind ................................ ........... X ............. Mr. Porter ............................. X ........... .............


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Representative Yea Nay Present Representative Yea Nay Present 

Mr. Pascrell ........................... ........... X .............

Ms. Berkley ........................... ........... X .............

Mr. Crowley ........................... ........... X .............

Mr. Van Hollen ...................... ........... X .............

Mr. Meek ............................... ........... X .............

Ms. Schwartz ........................ ........... X .............

Mr. Davis .............................. ........... X .............

IV. BUDGET EFFECTS OF THE BILL 

COMMITTEE ESTIMATE OF BUDGETARY EFFECTS

In compliance with clause 3(d)(2) of rule XIII of the Rules of the 

House of Representatives, the following Statement is made concerning the effects on the budget of this bill, H.R. 3920, as reported: 

The bill is estimated to have the following effects of Federal 

budget receipts for fiscal years 2008–2017: 


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STATEMENT REGARDING NEW BUDGET AUTHORITY OR TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee states that the bill involves new or increased budget authority. The Committee further 

states that the revenue-reducing tax provisions involve increased 

tax expenditures. (See amounts in the Congressional Budget Office 

estimate provided below and in the table in Part IV.A., above.) 

COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET OFFICE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, requiring a cost estimate prepared by 

the CBO, the following report prepared by the CBO is provided. 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, October 29, 2007. 

Hon. CHARLES B. RANGEL, 

Chairman, Committee on Ways and Means, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3920, the Trade and 

Globalization Assistance Act of 2007. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Christina Hawley Anthony. 

Sincerely, 

ROBERT A. SUNSHINE

(For Peter R. Orszag, Director). 

Enclosure. 

H.R. 3920—Trade and Globalization Assistance Act of 2007 

Summary: H.R. 3920 would reauthorize and expand coverage for 

the Trade Adjustment Assistance (TAA) programs, which are 

scheduled to expire on December 31, 2007. The bill also would: 

• Amend provisions in current law that authorize health 

care benefits for certain individuals, 

• Provide special transfers to states from the federal unemployment trust funds, 

• Extend an expiring provision of the Federal Unemployment Tax Act (FUTA), 

• Authorize new tax incentives for areas experiencing significant declines in manufacturing activity, and 

• Delay the implementation of tax rules related to the allocation of interest expenses. 

CBO and the Joint Committee on Taxation (JCT) estimate that 

enacting H.R. 3920 would increase direct spending by $0.3 billion 

in 2008 and $8.6 billion over the 2008–2017 period. In addition, 

CBO and JCT estimate that revenues under the bill would increase 

by $1.0 billion in 2008 and $9.4 billion over the 2008–2017 period. 

CBO also estimates that implementing H.R. 3920 would increase 

spending for discretionary programs authorized in the bill by $30 

million in 2008, and $338 million over the 2008–2012 period, assuming appropriation of the estimated amounts. 


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CBO reviewed the non-tax and employment insurance provisions 

of the bill and determined that the bill would impose an intergovernmental mandate as defined in the Unfunded Mandates Reform 

Act (UMRA). The bill would allow the Secretary of Labor to subpoena information from state and local governments to determine 

whether their workers have been adversely affected by trade. CBO 

estimates that the costs to governments to comply with a subpoena 

would be small and well below the threshold established in UMRA 

($66 million in 2007, adjusted annually for inflation). JCT reviewed 

the tax provisions of the bill and has determined those provisions 

contain no intergovernmental mandates as defined in the Unfunded Mandates Reform Act (UMRA). 

JCT determined that the tax provisions of the bill contain two 

private-sector mandates. CBO has determined that the employment insurance provisions of the bill also contain a private-sector 

mandate. In aggregate, the costs of all the mandates in the bill 

would exceed the annual threshold established by UMRA for private-sector mandates ($131 million in 2007, adjusted annually for 

inflation). 

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 3920 is shown in Table 1. The costs of the legislation fall under budget functions 350 (agriculture), 450 (community and regional development), 500 (education, employment, training and social services), 550 (health), and 600 (income security). 

TABLE 1.—BUDGETARY EFFECTS OF H.R. 3920 

By fiscal year, in millions of dollars— 

2008 2009 2010 2011 2012 2008– 

2012 

2008– 

2017 

CHANGES IN DIRECT SPENDING 

Estimated Budget Authority ............ 357 1,044 1,009 957 966 4,333 9,236 

Estimated Outlays ........................... 257 809 889 927 941 3,823 8,641 

CHANGES IN REVENUES 

Total Revenues ................................ 952 2,254 3,931 2,829 1,452 11,415 9,370 

CHANGES IN SPENDING SUBJECT TO APPROPRIATION 

Changes in Spending Subject to 

Appropriation: 

Estimated Authorization Level 129 143 144 144 144 704 n.a. 

Estimated Outlays .................. 30 51 79 89 89 338 n.a. 

Note: n.a. = not applicable. 

Basis of estimate: For this estimate, CBO assumes that H.R. 

3920 will be enacted early in fiscal year 2008, that the full 

amounts authorized will be appropriated for each year, and that 

outlays will follow historical patterns. 

Direct spending 

H.R. 3920 would reauthorize, expand coverage for, and increase 

benefits under the TAA for Workers program. (Authorization for 

the current program expires on December 31, 2007.) In addition, 

the bill would amend provisions related to health care benefits that 

are available to individuals who receive TAA benefits and individuals who receive their pension checks from the Pension Benefit 

Guaranty Corporation (PBGC). The bill also would make funding 

available to the states for their unemployment compensation proVerDate Aug 31 2005 07:39 Oct 30, 2007 Jkt 069006 PO 00000 Frm 00103 Fmt 6659 Sfmt 6602 E:\HR\OC\HR414P1.XXX HR414P1

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grams, and would encourage the states to adopt laws that cover 

more people. In total, CBO estimates that enacting H.R. 3920 

would increase direct spending by $0.3 billion in 2008, and $8.6 billion over the 2008–2017 period, as shown in Table 2. 

TAA for Workers. H.R. 3920 would reauthorize the TAA for 

Workers program through fiscal year 2012. That program provides 

extended unemployment compensation for up to 104 weeks, typically called trade readjustment allowances (TRAs), for workers who 

lose their job as a result of increased international trade. Workers 

certified to be eligible for TAA also may receive benefits to offset 

the costs associated with retraining, job search, and relocation expenses. In addition, TAA beneficiaries are eligible to receive a subsidy for the costs of purchasing health insurance during their period of unemployment. 

In fiscal year 2006, nearly 120,000 workers were certified as eligible to receive TAA benefits, and about 60,000 individuals started 

to receive cash and training benefits. TAA outlays, including the 

outlays from the health insurance subsidy, totaled about $775 million in 2006. Consistent with the budget projection rules in section 

257 of the Deficit Control Act, the costs of extending TAA for Workers are included in CBO’s baseline and are therefore not included 

in the costs attributable to this bill. CBO estimates those costs 

would total about $10.2 billion over the 2008–2017 period. 


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TABLE 2.

—CHANGES IN DIRECT SPENDING UNDER H.R. 3920 

By fiscal year, in millions of dollars

—

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008–2012 2008–2017 

TAA for Workers 

Service Workers and Other Eligibility Criteria: 

Estimated Budget Authority ........................................................................................................ 50 210 220 230 240 250 260 270 285 295 950 2,310 Estimated Outlays ....................................................................................................................... 25 130 215 225 235 245 255 265 275 290 830 2,160 

Industry-Wide Trade Adjustment Assistance: 

Estimated Budget Authority ........................................................................................................ 0 50 105 110 115 120 120 125 130 135 380 1,010 Estimated Outlays ....................................................................................................................... 0 25 80 110 110 115 120 125 130 130 325 945 

Program Benefits: 

Estimated Budget Authority ........................................................................................................ 120 270 370 390 405 420 430 445 460 470 1,555 3,780 Estimated Outlays ....................................................................................................................... 55 175 300 370 395 410 425 435 450 465 1,295 3,480 

Health Care Provisions 1: 

Estimated Budget Authority ........................................................................................................ 167 234 ¥41 ¥158 ¥194 ¥214 ¥221 ¥230 ¥239 ¥248 8 ¥1,145 

Estimated Outlays ....................................................................................................................... 167 234 ¥41 ¥158 ¥194 ¥214 ¥221 ¥230 ¥239 ¥248 8 ¥1,145 

Wage Insurance 2: 

Estimated Budget Authority ........................................................................................................ 15 60 75 80 85 85 85 90 90 90 315 755 Estimated Outlays ....................................................................................................................... 5 25 55 75 80 85 85 85 90 90 240 675 

Subtotal: 

Estimated Budget Authority ........................................................................................................ 352 824 729 652 651 661 674 700 726 742 3,208 6,711 Estimated Outlays ....................................................................................................................... 252 589 609 622 626 641 664 680 706 727 2,698 6,116 

Unemployment Insurance: 

Estimated Budget Authority ........................................................................................................ 5 220 280 305 315 320 300 260 255 265 1,125 2,525 Estimated Outlays ....................................................................................................................... 5 220 280 305 315 320 300 260 255 265 1,125 2,525 

Total Changes: 

Estimated Budget Authority ........................................................................................................ 357 1,044 1,009 957 966 981 974 960 981 1,007 4,333 9,236 Estimated Outlays ....................................................................................................................... 257 809 889 927 941 961 964 940 961 992 3,823 8,641 

Memorandum: Spending Assumed in CBO’s Baseline for TAA: 

Estimated Budget Authority ........................................................................................................ 939 971 992 1,012 1,034 1,056 1,079 1,103 1,127 1,153 4,948 10,466 Estimated Outlays ....................................................................................................................... 694 917 990 1,010 1,032 1,054 1,077 1,101 1,125 1,150 4,643 10,150 

Note: TAA = Trade Adjustment Assistance; components may not add up to totals because of rounding. 1 Estimate of the direct spending effects of the health care provision are provided by the Joint Committee on Taxation. 2 Based on consultation with the House Committee on the Budget, CBO has extended the costs of wage insurance through 2017. 


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In addition to reauthorizing the program, the bill would make 

several changes to the TAA for Workers program by: • Increasing the number of workers certified as eligible for 

TAA by expanding eligibility to include service workers and relaxing some eligibility criteria, • Providing industry-wide coverage, • Raising benefit levels for all beneficiaries, • Temporarily increasing health benefits, and • Extending and expanding the wage insurance program. 

In total, CBO estimates those changes would increase direct spending by $0.3 billion in 2008 and by $6.1 billion over the 2008 

to 2017 period. 

TAA for Service Workers and other eligibility criteria. Subtitle A 

of the bill would extend eligibility under the TAA for Workers program to individuals in the service and public sectors who lose their 

jobs as the result of increased imports of similar services or shifts 

in the location where those services are produced (overseas 

outsourcing). The subtitle also would make it easier for all workers 

to qualify for benefits when the eligibility criterion is that production shifted or that imports have increased. The subtitle would provide for the automatic certification of workers laid off from firms 

covered by an affirmative injury determination under certain U.S. 

trade laws. CBO estimates that those expansions in coverage would 

increase direct spending for TRAs by $25 million in fiscal year 2008 

and $2.2 billion over the 2008–2017 period. (Those additional certified workers also would be eligible for training and other benefits 

under TAA. The costs of extending those benefits to the additional 

certified workers are discussed below under the heading ‘‘Program 

Benefits.’’) 

Using methodology employed in previous estimates of expanding 

coverage and relaxing eligibility criteria, CBO estimates that the 

number of workers certified to receive TAA benefits would increase 

by nearly 80,000 workers a year. The bill would require the automatic certification of workers in industries that are covered by affirmative injury determinations of antidumping and countervailing 

duty cases investigated by the International Trade Commission 

(ITC). Based on historical determinations by the ITC and employment in the industries affected, CBO estimates that an additional 

4,000 workers annually could be certified under that provision. 

In order to collect those benefits, a certified worker must first exhaust his or her eligibility for regular unemployment compensation. Based on the CPS data, CBO expects that the majority of dislocated workers would find new employment before reaching that 

point. CBO estimates that, under the new provisions, on average, 

22,000 additional certified individuals would begin to collect TRAs 

under the TAA for workers program each year, at an average cost 

of $10,000 per individual 

Industry-Wide TAA. Beginning in 2009, subtitle B of the bill 

would require DOL to decide whether it should certify all workers 

in an industry once the department has certified three petitions in 

the same industry within a 180–day period. Based on our analysis 

of recent certifications by industry, CBO estimates that certifications of individuals under this provision could increase by about 

20 percent—or by nearly 50,000 people per year. However, CBO expects that workers certified in this manner would be less likely to 


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claim benefits. Accounting for those effects, CBO estimates that 

just under 10,000 people per year would collect TRA under this 

provision, increasing costs for the TAA for Workers program by 

about $0.9 billion over the 2008–2017 period. (Individuals certified 

under the Industry-Wide provisions also would be eligible for training and other benefits. The costs of providing those benefits are 

discussed in the following section). 

Program Benefits. Subtitle C would expand benefits available 

under the TAA for Workers program. CBO estimates that those 

benefit expansions would increase outlays by $55 million in 2008 

and $3.5 billion over the 2008–2017 period. Significant provisions 

of the bill would: • Raise the cap on training, • Provide additional weeks of TRA, • Codify the current practices related to funding administrative expenses, and • Increase funding for certain services. 

Raising the Cap on Training. Increasing the cap on training from $220 million to $440 million in 2008–and again to $660 million in 

2010–would allow workers newly certified under the bill to receive training benefits, which average about $7,000 per enrollee. CBO estimates that nearly half of the cost of the benefit expansions (about 

$1.6 billion) would result from raising that cap. About 75 percent 

of those costs would stem from providing benefits to additional 

workers certified under the bill’s eligibility expansions. CBO estimates that about 17,000 of those additional certified workers would 

enroll in training each year. The remaining costs would result from 

covering workers that would be certified under current law in years 

in which CBO estimates that the $220 million cap would otherwise 

be binding. 

Providing Additional Weeks for Training. H.R. 3920 would allow 

certain beneficiaries in training programs to draw TRA for longer 

than under current law. The bill also would extend the deadline for 

beneficiaries to choose to receive training. CBO estimates that enacting those changes would cost about $1.1 billion over the next 10 

years. About half of those costs would stem from providing an additional 26 weeks of TRA benefits for those individuals who require 

prerequisite training courses before they could begin their approved 

training. (Current law already allows that additional time for individuals requiring remedial training.) 

Funding Administration and Case Management. Under current 

practice, DOL provides 15 percent of the training cap amount to 

the states for administrative expenses related to the TAA for Workers program. H.R. 3920 would codify that practice. The bill also 

would provide each state with a grant equal to 0.06 percent of the 

training funds for dedicated case management and employment 

services. CBO estimates that enacting those provisions would cost 

$0.7 billion over the 2008–2017 period. 

Health Care Provisions. In addition, the bill would modify the 

health coverage tax credit (HCTC), which is a refundable tax credit 

for some health insurance costs that is available to workers who 

are eligible for TAA and individuals who receive their pension 

through the PBGC. By expanding eligibility for TAA, the bill would 

increase the number of individuals eligible for the HCTC. The bill 

also would increase the portion of health insurance expenses that 


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would be covered, and repeal the credit at the end of 2009. JCT estimates that the provision would increase outlays for the refundable tax credit by $167 million in 2008, and by $8 million over the 

2008–2012 period, and reduce outlays by $1.1 billion over the 

2008–2017 period. The effect on revenues is discussed below under 

the heading ‘‘Revenues.’’ H.R. 3920 would result in negligible savings to Medicaid by increasing the number of TAA beneficiaries and their dependents 

who would take the health insurance tax credit. In the absence of 

the tax credit, some portion of those workers would enroll in Medicaid under current law. Under the bill, those individuals instead 

would use the Health Coverage Tax Credit to enroll in a qualified 

health insurance plan. CBO estimates that these savings to Medicaid would be less than $500,000 in each year in fiscal years 2008 

and 2009. CBO estimates that costs to Medicaid could rise in the 

years after the tax credit would expire, but does not expect those 

costs to be significant. 

Wage Insurance. The Trade Act of 2002 created a pilot program 

for Alternative Trade Adjustment Assistance. That pilot allows individuals eligible for TAA who are age 50 and above to receive a 

wage subsidy in lieu of TRA and training benefits, if they took a 

lower paying job than the one they lost. That pilot program expires 

at the end of fiscal year 2008. Around 7,000 individuals received 

benefits of about $25 million under that pilot program through 

2006. Because outlays for the program under current law are estimated to be less 7 than $50 million in the year in which the program expires, its costs are not assumed to continue in baseline. 

H.R. 3920 would extend the program for an additional 5 years, 

and would rename it ‘‘Reemployment Trade Adjustment Assistance.’’ The bill would increase the limit on annual wages for eligi- ble reemployment to $60,000 from the current $50,000, and would 

increase the maximum wage benefit to $12,000 over two years from 

the current $10,000. H.R. 3920 also would allow beneficiaries more 

time to choose the wage insurance option, and would allow them 

to participate in TAA-subsidized training. Based on current participation levels, CBO estimates that 2 to 3 percent of certified workers would opt for the wage subsidy, roughly 7,000 people per year, 

and that the average subsidy received would total nearly $10,000 

over the individual’s eligibility period. In total, CBO estimates that 

enacting those amendments to the wage insurance program would 

increase direct spending by $5 million in fiscal year 2008 and $0.7 

billion over the 2008–2017 period. 

Unemployment Insurance. H.R. 3920 would provide transfers of 

up to $7.5 billion to the states for their unemployment compensation programs. Of that amount, $7 billion would be available to 

states that currently meet certain criteria or that change their laws 

to match those criteria. Another $500 million would be distributed 

among all of the states to improve unemployment insurance operations. 

Based on current state laws, CBO estimates that most states either do not or will not meet the necessary criteria to receive their 

full share of the $7 billion that would be available. CBO estimates 

that a total of $2.4 billion would be distributed over the 10-year period; split about equally between states that currently meet the criteria and states that we expect would change their laws to meet 


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the necessary criteria. The amounts transferred to the state trust 

funds would be considered intragovernmental transfers within the 

federal budget and are not shown in our estimates of outlays and 

revenues. However, CBO expects those transfers would have an effect on unemployment compensation and state employment taxes. 

CBO estimates that outlays for unemployment compensation would 

increase by $2.5 billion from additional benefits paid by the states 

that would change their laws in order to meet the necessary criteria for them to draw their share of the $7 billion and from the 

special distribution to all states ($0.5 billion). 

Revenues 

The bill would modify unemployment insurance taxation, provide 

new tax incentives for areas with significant declines in manufacturing activity, modify the health coverage tax credit, and delay the 

implementation of tax rules related to allocation of interest expenses. CBO and JCT estimate that the bill would increase revenues by about $1.0 billion in 2008, $11.4 billion over the 2008–2012 

period, and $9.4 billion over the 2008–2017 period, as shown in 

Table 3. 


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TABLE 3.

—CHANGES IN REVENUES UNDER H.R. 3920 

By fiscal year, in millions of dollars

—

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008–2012 2008–2017 

Delay World-Wide Interest Application ................................................................................................. 0 999 2,736 2,845 1,987 0 0 0 0 0 8,567 8,567 Unemployment Compensation 1 ............................................................................................................ 1,041 1,459 1,427 267 ¥253 ¥337 ¥314 ¥206 ¥69 36 3,941 3,051 

Manufacturing Redevelopment Zones .................................................................................................. ¥18 ¥104 ¥250 ¥351 ¥365 ¥348 ¥337 ¥329 ¥321 ¥314 ¥1,090 ¥2,739 

Health Coverage Tax Credit ................................................................................................................. ¥71 ¥100 18 68 83 92 95 98 102 106 ¥3 491 

Total Revenues ..................................................................................................................................... 952 2,254 3,931 2,829 1,452 ¥593 ¥556 ¥437 ¥288 ¥172 11,415 9,370 

Note: Components may not add up to totals because of rounding. 1 Revenues associated with unemployment compensation estimated by CBO. All other revenue estimates are provided by the Joint Committee on Taxation. 


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Delay in Application of Worldwide Interest Allocation. The bill 

would delay until 2012 the effective date of a provision enacted in 

the American Jobs Creation Act of 2004 that, starting in 2009, allows businesses to use an alternative method for allocating their 

interest expenses between the United States, and foreign sources. 

JCT estimates that the delay would increase revenues by $8.6 billion over the 2009–2012 period. 

Unemployment Compensation. The Federal Unemployment Tax 

Act (FUTA) imposes on employers an effective tax of 0.8 percent on 

the first $7,000 in wages paid annually to each employee. The 0.8 

percent tax includes a 0.2 percent surtax that is scheduled to expire on December 31, 2007. The bill would extend the surtax to December 31, 2010, which CBO estimates would increase revenues by 

$1 billion in 2008 and by $4.4 billion over the 2008–2011 period. 

In addition, the bill would provide for transfers to the states from 

the Federal Unemployment Account (FUA). CBO estimates that 

transfers of $2.4 billion would occur over the 2009–2012 period. Because the state funds are included in the unified federal budget, 

those transfers would have no immediate budgetary effect. However, CBO expects that some states would respond to the higher 

balances in their unemployment trust funds by increasing the unemployment benefits they pay or reducing their unemployment 

taxes. CBO estimates that the transfers would cause revenues on 

net to decrease by $452 million over the 2008–2012 period and $1.3 

billion over the 2008–2017 period. 

Manufacturing Redevelopment Zones. Under the bill, the Treasury Department would designate certain areas that have experienced significant declines in manufacturing activity as ‘‘manufacturing redevelopment zones,’’ which would receive tax advantages 

such as the authority to issue additional tax credit and tax-exempt 

bonds. JCT estimates that the provisions would reduce revenues by 

$18 million in 2008, $1.1 billion over the 2008–2012 period, and 

$2.7 billion over the 2008–2017 period. 

Revenues under HCTC. In addition, the bill would modify the 

health coverage tax credit, which is a refundable tax credit for 

some health insurance costs that is available to certain individuals: 

workers who are eligible for TAA and those who receive their pension from PBGC. By expanding eligibility for TAA, the bill would 

expand the coverage under the HCTC to additional individuals. 

The bill also would increase the portion of health insurance expenses that would be covered and repeal the credit at the end of 

2009. JCT estimates that the changes would reduce revenues by 

$71 million in 2008 and by $3 million over the 2008–2012 period, 

and increase revenues by $491 million over the 2008–2017 period. 

(JCT also estimates that the provision would increase outlays for 

the refundable tax credit by $167 million in 2008, and by $8 million over the 2008–2012 period, and reduce outlays by $1.1 billion 

over the 2008–2017 period, as discussed above under the heading 

‘‘Direct Spending.’’) 

Spending subject to appropriation 

In total, CBO estimates that H.R. 3920 would authorize the appropriation of $129 million in 2008 and $704 million over the 

2008–2012 period. Appropriation of those amounts would result in 


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estimated outlays of $338 million over the next five years, as 

shown in Table 4. 

Trade Adjustment Assistance for Farmers. The bill would authorize the appropriation of $81 million in 2008 and $90 million for 

each of fiscal years 2009 through 2012 for the TAA for Farmers 

program. TAA for Farmers assists eligible farmers to cope with increased import competition resulting from trade liberalization. Assuming appropriation of the authorized amounts, CBO estimates 

that implementing this section would cost $26 million in 2008 and 

about $166 million over the 2008–2012 period. 

TABLE 4.—CHANGES IN SPENDING SUBJECT TO APPROPRIATION UNDER H.R. 3920 

By fiscal year, in millions of dollars—

2008 2009 2010 2011 2012 

TAA for Farmers: 

Estimated Budget Authority ....................................................... 81 90 90 90 90 

Estimated Outlays ...................................................................... 26 35 35 35 35 

TAA for Firms: 

Estimated Budget Authority ....................................................... 46 50 50 50 50 

Estimated Outlays ...................................................................... 13 13 40 50 50 

Other Provisions: 

Estimated Budget Authority ....................................................... 2 3 4 4 4 

Estimated Outlays ...................................................................... 1 3 4 4 4 

Total—Changes in Spending Subject to Appropriation: 

Estimated Budget Authority ....................................................... 129 143 144 144 144 

Estimated Outlays ...................................................................... 30 51 79 89 89 

Note: TAA = Trade Adjustment Assistance. 

Trade Adjustment Assistance for Firms. The bill would authorize 

the appropriation of $50 million for each of fiscal years 2008 

through 2012 for the TAA for Firms program. The bill would strike 

language authorizing the appropriation of $4 million for the first 

three months of 2008 (see Public Law 110–89) for a net increase 

of $46 million for 2008. The TAA for Firms program provides financial assistance to manufacturers that have been adversely affected 

by import competition. The bill would expand the program to include service sector firms and would establish a demonstration program to help small- and medium-sized manufacturers gain access 

to resources to help them compete in foreign and domestic markets. 

Assuming appropriation of the specified amounts, CBO estimates 

that implementing these sections would cost $156 million over the 

2008–2012 period. 

Other Provisions. H.R. 3920 also would: 

• Increase the number of TAA petitions to be reviewed and 

certified each year, 

• Establish an office of Trade Adjustment Assistance within 

the Department of Labor to implement and oversee the administration of the TAA program, 

• Require the Department of Labor to collect and disseminate data on all adversely affected workers who apply for or 

receive adjustment assistance, 

• Require the Government Accountability Office to conduct 

studies on the health insurance tax credit allowed under section 35 of the Internal Revenue Code of 1986 and the procedures for the allocation of training funds, and 


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• Establish a Safety Net Review Commission to evaluate 

employment assistance programs and make recommendations 

for their improvement. 

In total, based on similar activities, CBO estimates that these 

provisions would cost $1 million in 2008 and $16 million over the 

2008–2012 period, assuming appropriation of the necessary 

amounts. 

Estimated impact on state, local, and tribal governments: CBO 

reviewed the employment insurance provisions of the bill and determined that section 101 would impose an intergovernmental 

mandate as defined in UMRA. That section would extend trade assistance benefits to workers in public agencies. Because the Secretary of Labor is authorized under the act to subpoena information from employers for the purpose of certifying workers as adversely affected by trade, state and local government officials would 

be required, if subpoenaed, to attend hearings, provide testimony, 

or produce documents. That requirement would be an intergovernmental mandate as defined in UMRA; however, CBO estimates 

that the costs to comply with a subpoena would be small and well 

below the threshold established in UMRA ($66 million in 2007, adjusted annually for inflation). 

JCT reviewed the tax provisions of the bill and has determined 

those provisions contain no intergovernmental mandates as defined 

in UMRA. 

In general, states that provide employment services, training, 

and supplemental assistance under cooperative agreements would 

benefit from the programs authorized in the bill. Any costs those 

states might incur to comply with program conditions would be incurred voluntarily. 

Estimated impact on the private sector: JCT and CBO have determined that the bill contains private-sector mandates as defined 

in the Unfunded Mandates Reform Act. In aggregate, the costs of 

all the mandates in the bill would exceed the annual threshold established by UMRA for private-sector mandates ($131 million in 

2007, adjusted annually for inflation). 

Tax provisions 

JCT determined that the tax provisions of the bill contain two 

private-sector mandates: 1) Sunset of the health coverage tax credit; and 2) delayed implementation of worldwide interest allocation. 

Based on information provided by JCT, CBO has determined that 

the costs of those mandates could total several billion dollars over 

the next five years. 

Employment insurance provisions 

CBO determined the employment insurance provisions of the bill 

would impose a private-sector mandate, as defined in UMRA, because the bill would extend the FUTA surtax on employers that is 

currently scheduled to expire at the end of 2007. CBO estimates 

the cost of that mandate would be several billion dollars over the 

next four years. 

Estimate prepared by: Federal Spending: TAA for Workers and 

Unemployment Compensation—Christina Hawley Anthony; Studies 

and reports—Chad Chirico; Revenues—Barbara Edwards; TAA for 

Firms—Daniel Hoople; TAA for Farmers—David Hull; Impact on 


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state, local, and tribal governments: Lisa Ramirez-Branum; Impact 

on the private sector: Ralph Smith. 

Estimate approved by: Keith Fontenot, Deputy Assistant Director 

for Health and Human Resources, Budget Analysis Division; G. 

Thomas Woodward, Assistant Director for Tax Analysis. 

MACROECONOMIC IMPACT ANALYSIS

In compliance with clause 3(h)(2) of rule XIII of the Rules of the 

House of Representatives, the following statement is made by the 

Joint Committee on Taxation with respect to the provisions of the 

bill amending the Internal Revenue Code of 1986: the effects of the 

bill on economic activity are so small as to be incalculable within 

the context of a model of the aggregate economy. 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE 

RULES OF THE HOUSE 

COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

With respect to clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives (relating to oversight findings), the Committee concluded that it was appropriate and timely to enact the 

sections included in the bill, as reported. 

STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

With respect to clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee establishes the following 

performance related goals and objectives for this legislation: The 

Departments of Labor, Commerce, and Agriculture shall use the 

authority under Section 221 et seq. of the Trade Act of 1974, as 

modified by H.R. 3920, as amended, to better assist worker, firms, 

meet and overcome the challenges they confront as a result of the 

impact of trade and globalization. The Department of Labor shall 

also use the authority provided for by this legislation to promote 

reform of the unemployment insurance system by encouraging and 

rewarding States for taking specific steps to improve UI coverage 

for low-wage, part-time and other workers. Finally, the Department 

of the Treasury shall use its new authority to encourage the redevelopment of communities that have suffered substantial reductions in manufacturing employment. 

CONSTITUTIONAL AUTHORITY STATEMENT

With respect to clause 3(d)(1) of rule XIII of the Rules of the 

House of Representatives, relating to Constitutional Authority, the 

Committee States that the Committee’s action in reporting the bill 

is derived from Article 1 of the Constitution, Section 8 (‘The Congress shall have power to lay and collect taxes, duties, imposts and 

excises, to pay the debts and to provide for * * * the general Welfare of the United States.’) 

INFORMATION RELATING TO UNFUNDED MANDATES

This information is provided in accordance with section 423 of 

the Unfunded Mandates Act of 1995 (Pub. L. No. 104–4). 


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The Committee has determined that the revenue provisions of 

the bill contain two Federal mandates on the private sector. Those 

two provisions are: (1) the sunset of the health coverage tax credit; 

and (2) the delay in the implementation of the worldwide interest 

allocation. 

The Committee has determined that the revenue provisions of 

the bill do not impose a Federal intergovernmental mandate on 

State, local, or tribal governments. 

APPLICABILITY OF HOUSE RULE XXI 5(1)(b) 

Clause 5 of rule XXI of the Rules of the House of Representatives 

provides, in part, that ‘‘A bill or joint resolution, amendment, or 

conference report carrying a Federal income tax rate increase may 

not be considered as passed or agreed to unless so determined by 

a vote of not less than three-fifths of the Members voting, a 

quorum being present.’’ The Committee has carefully reviewed the 

section of the bill, and states that the 70 bill does not involve any 

Federal income tax rate increases within the meaning of the Rule. 

PRE-EMPTION CLARIFICATION

This information is provided in accordance with section 423 of 

the Congressional Budget Act of 1974. The Committee has determined that the bill, as reported, does not pre-empt State or local 

law. 

TAX COMPLEXITY ANALYSIS

Section 4022(b) of the Internal Revenue Service Reform and Restructuring Act of 1998 (the ‘‘IRS Reform Act’’) requires the Joint 

Committee on Taxation (in consultation with the Internal Revenue 

Service and the Department of the Treasury) to provide a tax complexity analysis. The complexity analysis is required for all legislation reported by the Senate Committee on Finance, the House 

Committee on Ways and Means, or any Committee of conference if 

the legislation includes a provision that directly or indirectly 

amends the Internal Revenue Code and has widespread applicability to individuals or small businesses. 

The staff of the Joint Committee on Taxation has determined 

that a complexity analysis is not required under section 4022(b) of 

the IRS Reform Act because the bill contains no provisions that 

amend the Code and that have ‘‘widespread applicability’’ to individuals or small businesses. 

LIMITED TAX BENEFITS

Pursuant to clause 9 of rule XXI of the Rules of the House of 

Representatives, the Ways and Means Committee has determined 

that the bill as reported contains no congressional earmarks, limited tax benefits, or limited tariff benefits within the meaning of 

that Rule. 


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VI. DISSENTING VIEWS 

MINORITY DISSENTING VIEWS ON H.R. 3920, THE ‘‘TRADE 

AND GLOBALIZATION ASSISTANCE ACT OF 2007’’

A. INTRODUCTION

We regret that we cannot support H.R. 3920, as introduced and 

as modified by the Chairman’s amendment in the nature of a substitute, to amend and reauthorize the Trade Adjustment Assistance 

(TAA) program. We are disappointed that the bill does not reflect 

our proposals and is not the product of a bipartisan effort to reform 

and reauthorize the program. We find this particularly unfortunate 

because we and our Democratic colleagues on the Committee all 

agree that TAA is an important program for helping workers adversely affected by trade and that the program is in need of reform. 

On October 12, Chairman Rangel released his discussion draft to 

us and to the public. We then released our own discussion draft a 

few days later. We participated, together with our Democratic colleagues, in an informal caucus on October 18 to discuss each other’s ideas. We had sincerely hoped that this meeting and the days 

that followed would provide an opportunity to come to agreement 

over how best to extend and improve TAA, as well as the path forward for consideration of all of our pending Free Trade Agreements. We anticipated that our proposals would be considered by 

our Democratic colleagues as a contribution to a healthy policy debate, but it does not appear they seriously considered our ideas. In 

fact, when our Democratic colleagues voted against the Republican 

substitute and various amendments containing aspects of that substitute, they voted against each and every one of the key proposals 

contained in our TAA and globalization assistance legislation. 

We write these dissenting views because H.R. 3920, as amended: 

(1) contains unacceptable policies, including tax hikes that discourage job creation in the United States; (2) perpetuates and inflates 

inefficiencies while significantly expanding TAA and its costs and 

raising other serious policy concerns; and (3) fails to include sensible and meaningful reforms and other policies contained in the 

Republican substitute that Ranking Member McCrery offered and 

all Republican members of the Committee supported. 

We were gratified that Chairman Rangel, based on his comments 

at the conclusion of the Committee markup, stated that he would 

work with us on our proposals, and we still hope that our ideas can 

be incorporated into the bill before it is considered by the House. 

B. TAA SHOULD BE CONSIDERED IN THE CONTEXT OF TPA AND THE

TRADE AGENDA

At the outset, we believe that we should discuss TAA expansions 

in the context of initiatives to expand trade, such as through swift 


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passage of the Free Trade Agreements (FTAs) covering Peru, Panama, Colombia, and Korea, as well as through the extension of 

Trade Promotion Authority (TPA). Therefore, Ranking Member 

Herger offered an amendment (which he later withdrew) to extend 

TPA for five years, for purposes of continuing this discussion. 

In our view, expanding trade is an essential part of our trade 

agenda, as is making sure that we create opportunities for American workers who may be dislocated because of trade to quickly reenter the workforce in productive and fulfilling jobs. We are 

alarmed to see that the debate seems to be focused on the latter 

point while ignoring the first point. Both must be considered. 

Survey data from the Council of Economic Advisors shows that 

fewer than three percent of layoffs between 1996 and 2004 could 

be attributed to import competition or overseas relocation. Moreover, the rate of job creation in globally engaged companies is faster than the overall private-sector rate. Of course, any job lost is 

traumatic for the worker involved and his or her family, and we 

are deeply committed to making sure that Americans have the 

tools they need to adjust to the changing economy. However, we 

must not abandon our effort to seek new markets for our goods and 

services. 

Simply put, the United States is the number one trading nation 

in the world, with a globally integrated economy that relies on commerce with the rest of the world to sustain economic growth and 

employment. Our trade agreements have helped bring down trade 

barriers abroad for America’s growers, manufacturers and service 

providers. Our FTAs have brought proven results. Our FTA partners make up 7.3% of global Gross Domestic Product, but our exports to these countries comprise more than 42% of total U.S. exports. The U.S. trade balance with the twelve countries for which 

FTAs have been implemented under TPA improved by an overwhelming 162 percent between 2001 and 2006, creating a trade surplus of $13.9 billion. Our trading partners become strong allies of 

the U.S., which is important for geopolitical reasons, and they also 

benefit from increased rule of law and economic transparency. 

If we halt our trade agenda, we risk losing market share around 

the globe. Countries like China and blocs of nations like the European Union are busy working on trade agreements with each other 

that lock out American products. We have a narrowing window of 

opportunity to advance our American trade agenda. We do not have 

the choice to stand still because if we do so, our competitors will 

inevitably overtake us. We either advance with TPA, or we move 

backward as other countries liberalize trade on their own. 

C. H.R. 3920, AS AMENDED, CONTAINS UNACCEPTABLE POLICIES

AND IS COSTLY AND INEFFICIENT

H.R. 3920, as amended, is costly and promotes inefficiencies, and 

we have significant policy objections to a number of the bill’s provisions. The bill would: dramatically enlarge the TAA program instead of reforming and better integrating it with other federal programs; create very expensive and, in some cases, unneeded new 

federal spending; expand and encourage Unemployment Insurance 

benefit collection without better helping laid off workers find new 


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jobs; and increase payroll and other taxes, harming job creation in 

the United States. 

We attach a letter from the Secretary of Labor because we believe that the views she presents are an important part of the dialogue as well. 

1. EXPANDING THE TAA PROGRAM AND ITS COSTS WHILE INFLATING

INEFFICIENCIES

The existing TAA program is an important but expensive program. TAA already costs taxpayers $966.4 million per year, while 

providing assistance to only about 54,000 workers, costing an average of $18,000 per worker. H.R. 3920, as amended, would continue 

current inefficiencies and even inflate them, while also significantly 

expanding the TAA program and its costs. In fact, the Majority has 

been unable to tell us how much the total cost per worker would 

rise under their bill. 

One example of the problematic increase in coverage is the expansion of TAA to provide benefits to federal, state, and local government employees, making it costly for the government to streamline and consolidate functions and deliver services more efficiently. 

The logic for providing government workers special assistance is 

unclear, at best. TAA has always been designed and intended to assist private sector workers adversely affected by trade in adjusting 

to the global economy. With all due respect to our hard-working 

government employees, their role in the economy is different, and 

H.R. 3920, as amended, would expand the program in a whole new 

direction. For these reasons, Ranking Member Herger offered an 

amendment to strike the expansion of TAA benefits to public agency employees. Unfortunately, the amendment was defeated. 

2. UNNECESSARILY INCREASING FUNDING

H.R. 3920, as amended, would spend money where it is not needed, for example by initially doubling and then tripling the TAA 

training budget. But sufficient funds are currently available for all 

certified workers to have access to training. Since the cap was 

raised in 2003, and under the funding formula developed by the 

U.S. Department of Labor for allocating training funds to the 

states, sufficient funds have been available each year. In fact, 

funds have been available for distribution at the end of each fiscal 

year, and nearly $300 million is unspent. 

3. INCREASING TAXES THROUGH DEFERRAL OF INTEREST ALLOCATION

RULES

H.R. 3920, as amended, would be partly paid for by delaying interest allocation rules first enacted in 2004, which made good sense 

then and still do today. When implemented, they will address an 

unfairness in current law that can subject American companies 

doing business abroad to double taxation on their foreign income. 

It is indeed ironic that legislation that we had hoped would pave 

the way for consideration of the full trade agenda by restoring confidence in our global trading system would itself make U.S. companies less competitive. 


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During the markup, Republicans expressed concerns that this 

delay would be the first of many, as the Majority would find other 

‘‘worthy’’ reasons to delay the implementation of the new rules, 

moving the goalposts over and over. That fear was proven true just 

a day later, when Chairman Rangel introduced his broad AMT bill, 

which includes a complete repeal of the new interest allocation 

rules. While we are doubtful that the full repeal bill will be enacted 

before the end of next year, it is clear that to prevent this or future 

Congresses from using the interest allocation as a cash cow, this 

delay should be deleted and the new rules should be allowed to 

take effect as scheduled after the end of 2008. 

4. MAINTAINING INEFFICIENT AND INFLEXIBLE TRAINING OPTIONS

While the Republican substitute would increase flexible training 

opportunities for dislocated workers so that they are better positioned to return to work sooner, H.R. 3920, as amended, would 

pointlessly keep participants in the TAA program longer. Ranking 

Member Herger offered an amendment to include more flexible 

training options and include other training-related reforms and improvements from the Republican substitute, but unfortunately our 

Democratic colleagues rejected it on a party-line vote. 

5. FAILING TO REQUIRE ACCOUNTABILITY

It is inexplicable to us why H.R. 3920, as amended, would provide for an additional $8.7 billion in direct spending over ten years 

but would not require accountability as to how that money or the 

money already committed will be spent on the TAA programs. It 

is our duty to the American people to make sure that we are spending their money wisely. The common sense performance measures 

in the Republican substitute and in the amendment offered by Representative Ryan would allow the Departments of Labor and Commerce to measure whether the TAA for workers and firms programs, respectively, are effective in getting workers quickly back to 

fulfilling employment without a loss in wages. Unfortunately, the 

Majority defeated this common-sense amendment on a party-line 

vote. 

6. REQUIRING TAA BE ADMINISTERED ONLY BY CERTAIN STATE

EMPLOYEES

H.R. 3920, as amended, would expand the government bureaucracy and increase costs by requiring that the TAA program be run 

only by so-called state ‘‘merit-based’’ employees (otherwise known 

as state Employment Service (ES) employees). This would mean 

that the states could not continue to exercise their discretion to administer the program using local staff, private sector contractors, 

501(c)(3) non-profit contractors, or faith or community-based organization contractors, as they can today. 

Today, 25 states use employees other than state ES employees 

to administer these services, such as service providers from local 

communities and private contractors, particularly to conduct skill 

assessments as part of individual employment plans for TAA workers. These states have determined that administering the program 


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in this way is the most effective means of providing services to 

their citizens. 

Specifically, the flexibility that exists today allows for a high degree of ‘‘one-stop’’ integration of functional services provided 

through the Workforce Investment Act (WIA) together with TAA. 

WIA staff are usually not state ‘‘merit-based’’ employees, meaning 

they are not part of the state Employment Service. Therefore, these 

25 states would clearly have their service models impacted if required to terminate services through non-state ES staff. 

Moreover, customers who are enrolled in WIA today receive more 

in-depth assessment, counseling, case management, and post-training assistance. However, the assessments available to TAA customers through state ES employees are limited in scope and depth. 

In addition, we understand that ES employees are not generally 

trained in vocational counseling, thus limiting the quality of ESprovided assessments. Assessments provided to customers co-enrolled with WIA are generally considered to be of higher quality, 

more in-depth, and more likely to be provided by a staff person 

with some training in vocational counseling. 

H.R. 3920, as amended, would make it very difficult for TAA participants to receive the full range of wrap-around services available 

under WIA and obtain the very best counseling. We believe that 

the legislation is inconsistent with our goal of extending TAA to 

help TAA recipients get back on their feet quickly. 

For these reasons, Representative Johnson offered an amendment to strike the requirement in the Chairman’s amendment in 

the nature of a substitute that only ES employees be used and to 

preserve the flexibility that states have and use today to provide 

the best range of services to recipients and to coordinate their programs with local programs, whether it be through state ES employees or others. Unfortunately, the amendment was defeated. 

7. ENDING THE HEALTH COVERAGE TAX CREDIT

With regard to the permanent health coverage tax credit that exists in the current TAA program, H.R. 3920, as amended, is contradictory. First, it would greatly expand the benefit in ways that 

are not cost effective. Then it would terminate the entire credit in 

two years despite the fact that the benefit is permanent now. It is 

a dangerous gamble to terminate health coverage assistance that 

TAA participants depend on—whether the reason is a budget gimmick to reduce costs or a means to create leverage for a dramatic 

expansion agenda in the future. 

8. PROMOTING FLAWED TAX INCENTIVES

The tax incentives in H.R. 3920, as amended, are flawed. The bill 

would create a large program of tax credit bonds to be used in new 

‘‘manufacturing redevelopment areas.’’ The qualified expenditures 

of these tax credit bonds are broadly and loosely defined to include 

expenditures such as ‘‘construction of public facilities’’ and ‘‘other 

economic activity.’’ While we appreciate the Majority’s decision to 

prevent these bonds from being stripped—a feature of particular 

concern with respect to similar tax credit bonds approved by the 

House in the energy bill earlier this year—we continue to believe 

that tax credit bonds are largely unproven and believe it more apVerDate Aug 31 2005 07:39 Oct 30, 2007 Jkt 069006 PO 00000 Frm 00120 Fmt 6604 Sfmt 6602 E:\HR\OC\HR414P1.XXX HR414P1

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propriate to provide these incentives through more tested means, 

such as the New Markets Tax Credits in the Republican substitute. 

If the Majority continues to believe that tax credit bonds are the 

cure for all that ails America, then we urge them to provide more 

meaningful limits to states and municipalities as to how the proceeds of those bonds can be spent. This Committee learned this lesson with tax-exempt bonds the hard way; we need not repeat history with tax credit bonds. 

We are concerned that to become a ‘‘manufacturing redevelopment area’’ and obtain the tax incentives under the bill, communities would have to give up their current designation as a renewal 

community, enterprise zone, or empowerment zone. We were 

pleased that the Chairman agreed with Representatives Tiberi and 

Reynolds that this could work an unfairness on businesses in those 

zones that have made investment and planning decisions in reliance on the tax benefits of the designation and agreed to work with 

them to craft appropriate transition relief. 

9. INCREASING PAYROLL TAXES AND EXPANDING UNEMPLOYMENT

BENEFITS INSTEAD OF HELPING WORKERS FIND NEW JOBS

H.R. 3920, as amended, would unnecessarily increase federal unemployment payroll taxes by extending the 0.2% FUTA surtax for 

another three years. This is expected to increase federal revenue by 

almost $5 billion, despite the fact that the federal unemployment 

trust funds currently hold $35 billion and federal program expenses 

under current law run about $4 billion per year, as was established 

at the markup. Thus this tax increase—extending yet again a supposedly ‘‘temporary’’ surtax created in the 1970s—is totally unnecessary. The bill then suggests that it would make $7 billion available to 

states that either already have expanded eligibility for unemployment benefits to certain laid off workers, or that choose to do so 

in the next five years. This is a false promise—first, because most 

states would not access their promised share of that $7 billion, and 

second because even if they did the federal payments would be 

available once while the costs of paying for expanded benefits 

would be a state liability forever. Further, the categories of unemployed workers that states would have to cover to access this onetime infusion of federal funds include laid off workers not typically 

thought of as affected by globalization, such as those who quit their 

jobs and part-time workers. In so doing, the bill would raise taxes 

on nearly every employee, discouraging employment. It also would 

subsidize high tax and benefit states (for example, states that have 

already found a way to pay for such benefit expansions) at the expense of low tax and benefit states. The bill also promotes the longrun federal setting of unemployment benefit eligibility terms, in 

contravention of the history of state flexibility and control. Finally, 

while promoting more and longer unemployment benefit collection, 

the bill does nothing to help laid off workers more quickly find good 

jobs, which should be the program’s ultimate goal. 

10. CONCLUSION

Ultimately, H.R. 3920, as amended, would grossly expand entitlement programs and add to their current inefficiencies, without a 


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guarantee that the pending FTAs or TPA will ever be considered 

by Congress. The Republican substitute offered by Ranking Member McCrery is a more cost-effective approach that would give TAA 

participants more training options and access to more services 

through TAA and other programs so that they could gain the skills 

they need to return to work sooner. 

D. SUMMARY OF REPUBLICAN SUBSTITUTE

1. REFORMING TAA TO BETTER HELP WORKERS ADVERSELY AFFECTED

BY TRADE

We strongly support the reauthorization of the TAA program, 

which has been successful in helping many adjust to trade. But 

TAA can and should be reformed. 

The Republican substitute offered by Ranking Member McCrery 

would reauthorize for five years the TAA for workers, firms, and 

farmers programs. It would restructure the TAA for workers program from a predominantly income support program today that offers training and other benefits into a job retraining program that 

improves access to education and training and continues to provide 

income support, health care, and other benefits. The Republican 

substitute would make reforms and improvements in a number of 

areas, including the following: 

a. TAA training reforms and improvements 

The Republican substitute would make meaningful and important reforms and improvements relating to training benefits under 

the TAA program. 

First, the Republican substitute would retain the current two 

years of income support for TAA for workers program participants 

who remain unemployed and train full-time, but it also would permit, in certain circumstances, two years of income support for those 

who work part-time and train part-time. We believe that this increased flexibility would give workers more choices and allow them 

to take charge of their lives and determine what is the best for 

them. 

Second, the Republican substitute would improve TAA participants’ access to training and education by providing ‘‘New Economy 

Scholarships’’ of up to $8,000 per participant that a participant 

could choose when to use over a four-year period on a range of 

training and education programs, even if the participant became 

reemployed. Today, TAA training is typically available for only two 

years. Moreover, while under current law, there is no specific monetary limit, the costs of training must be ‘‘reasonable,’’ which is 

subject to judgment and uncertainty. The Republican substitute 

would provide certainty as well as a generous limit far exceeding 

current average usage. Specifically, the average cost of training 

under current law is only $3,060 per TAA participant and typically 

lasts only one year, so the $8,000 New Economy Scholarship would 

more than double the amount used. In the case of remedial education, the scholarship would amount to an extra $1,000, nearly tripling the average cost of training. The most common provider of occupational training is the local community or technical college. The 

limit of $8,000 over four years would be significantly greater than 


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the average cost of a two-year program at a community college 

(about $4,500 over two years) and would be similar to limits that 

apply to other federal postsecondary assistance (i.e., Pell grants). 

Third, the Republican substitute would authorize $50 million for 

new capacity building grants for community colleges and other 

training providers to offer enhanced training to more TAA participants. 

Fourth, the Republican substitute would provide TAA participants more flexible training and work options that are not available under current law, including: 

• Allowing them to combine full-time work with either fulltime or part-time training, or combine part-time work with either full-time or part-time training, whereas current law requires full-time training; 

• Making TAA-eligible training programs that lead to a license, certificate or community college degree and are linked 

to a high-demand occupation, and apprenticeship programs; 

and 

• Enabling TAA participants to begin training sooner—even 

prior to layoff. Current law forces workers to wait until more 

than a month after layoff. H.R. 3920, as amended, would 

inexplicably allow only workers certified through the industrywide process, not the traditional firm-by-firm process, to train 

prior to layoff, and the Republican substitute would correct 

this problem. The substitute would also allow workers to focus 

on a job search sooner while receiving income support without 

also having to be in training or obtain a training waiver (as is 

required today). 

Fifth, the Republican substitute would encourage better allocation of current training funding for the states (which has not been 

fully used today, as discussed above), by requiring the U.S. Department of Labor to report to Congress every six months on its allocation of funding to the states to better ensure funding is appropriately distributed. 

Ranking Member Herger offered an amendment to include these 

training-related reforms and improvements to the Chairman’s 

amendment in the nature of a substitute and strike its inconsistent 

provisions, but unfortunately the amendment was defeated on a 

strictly party-line vote. 

b. Increased Health Coverage Tax Credit 

The Republican substitute would increase the federal share of 

monthly TAA participant premiums for the Health Coverage Tax 

Credit (HCTC) from 65 percent today to 70 percent. It also would 

continue the HCTC benefit, unlike H.R. 3920, as amended, which 

would terminate this important benefit in two years. 

c. New wage supplement 

The Republican substitute would convert the existing wage insurance pilot program for older workers (Alternative TAA) into a 

transitional wage supplement available to all TAA participants (regardless of age) who become reemployed for at least 30 hours per 

week at low wages (defined as up to minimum wage plus $2.40). 


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It would allow such workers to also obtain the Health Coverage 

Tax Credit and TAA training. 

d. Broader TAA eligibility criteria 

The Republican substitute would broaden the criteria for eligible 

workers to include: • Workers at downstream producers that are secondarily affected by imports or shifts in production to more countries (not 

just Canada and Mexico); • Workers laid off due to a trade impact on an intangible 

product (e.g. software) produced by their firm and sent electronically (not just on disk) to customers; and • Contract and leased workers under operational control of 

a firm producing an article (not just employees of the firm). 

e. TAA performance accountability measures 

The Republican substitute would establish performance accountability measures for evaluating the performance of the TAA for 

workers and firms programs and their results for participants. As 

noted in the previous section, Representative Ryan offered an 

amendment to include such accountability measures in the Chairman’s amendment in the nature of a substitute, but unfortunately 

it was defeated on a strictly party-line vote. 

f. Better integration of TAA and WIA 

The Republican substitute would better integrate the TAA program with the U.S. Department of Labor’s workforce investment 

system (WIA) and its One-Stop Career Centers. This would provide 

TAA participants with access to more services, such as career counseling, assessment, and job placement services. 

g. Increased funding for TAA, for firms program 

The Republican substitute would increase annual authorized 

funding for the TAA for firms program to address a backlog in approved but unfunded projects. 

2. GOING BEYOND TAA TO HELP WORKERS, FIRMS AND COMMUNITIES

AFFECTED BY TRADE, GLOBALIZATION AND OTHER JOB LOSS CAUSES

In addition to reforming the TAA program, the Republican substitute recognizes that the TAA program is only one tool in the policy toolbox for addressing the effects of trade, globalization and 

change. 

a. Unemployment compensation improvements 

The Republican substitute would better integrate the TAA program with other federal programs to more effectively equip American workers with the skills they need to adapt to change. For example, it would: 

• Allow states to apply for waivers of unemployment compensation program rules to design more flexible benefits, including wage insurance and other approaches, to help laid-off 

workers more quickly return to work; 

• Build on the successful model of welfare reform waivers, 

allowing states to implement similar demonstration projects to 


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test new ideas for improving unemployment benefit programs; 

and 

• Ensure that projects are revenue neutral. 

This concept is reflected in the ‘‘Unemployment Compensation 

Improvement Act of 2007’’ (H.R. 1513) introduced by Representative Weller earlier this year and in his amendment to the Chairman’s amendment in the nature of a substitute, which was defeated on a strictly party-line vote. 

The Republican substitute also includes a provision proposed in 

the President’s FY2008 Budget that seeks to improve the collection 

of Unemployment Insurance overpayments and delinquent employer contributions through garnishment of federal income tax refunds. This system is already used by child support and other programs to successfully collect millions of dollars in program debt. 

This would provide the states with an important additional administrative tool to recover these debts, and builds on a provision already approved by the Committee and the House of Representatives on a bipartisan basis earlier this year as part of H.R. 2608, 

the ‘‘SSI Extension for Elderly and Disabled Refugees Act.’’

b. New Markets Tax Credit expansion 

The Republican substitute contains proposals reflected in the 

‘‘New Employment for Workers & Job Opportunities for Business 

Strength Act of 2007’’ (H.R. 3843) that was recently introduced by 

Representative Reynolds. The Republican substitute would expand 

the existing New Markets Tax Credit (NMTC) program to benefit 

firms and workers in local communities impacted by trade, 

globalization and other causes of job loss. The existing New Markets Tax Credit program provides tax incentives for companies who 

invest their capital in businesses operating in economically disadvantaged areas. 

Specifically: 

• The Republican substitute would provide an additional 

$500 million in New Markets Tax Credits for businesses and 

communities adversely affected by trade. 

• These additional New Market Tax Credits would provide 

private capital to businesses operating in low-income census 

tracts which can also demonstrate qualification under the TAA 

for firms program. 

• Other eligible businesses would be those operating in lowincome areas who prospectively hire 40% or more TAA eligible 

employees. 

By expanding the NMTC to assist communities impacted by 

trade, globalization and other causes of job loss, the Republican 

substitute would foster regional economic development in such 

communities. 

E. CONCLUSION

For the foregoing reasons, we oppose H.R. 3920, as amended, and 

support the Republican substitute offered by Ranking Member 

McCrery. We remain hopeful that our concerns about the bill and 

its shortcomings can and will be addressed before House floor debate and in conference with the Senate and that we will have the 


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opportunity to have our views and proposals taken into account by 

our Democratic colleagues as this process moves forward. 

JIM MCCRERY. 

WALLY HERGER. 

JIM RAMSTAD. 

SAM JOHNSON. 

JERRY WELLER. 

RON LEWIS. 

KEVIN BRADY. 

PAUL RYAN. 

ERIC CANTOR. 

JOHN LINDER. 

DEVIN NUNES. 

PAT TIBERI. 

JON PORTER. 

VII. COMMITTEE CORRESPONDENCE 

SECRETARY OF LABOR, 

Washington, DC, October 23, 2007. 

Hon. CHARLES RANGEL, 

Chairman, Committee on Ways and Means, 

House of Representatives, Washington, DC. 

DEAR CHAIRMAN RANGEL: This is to express the views of the Department of Labor on H.R. 3920, the ‘‘Trade and Globalization Act 

of 2007,’’ as introduced. The Administration strongly opposes this 

bill as drafted but remains committed to improving the Federal 

government’s system for providing much-needed assistance to 

American workers and to working with Congress to reform Trade 

Adjustment Assistance (TAA) in a way that will benefit workers 

adversely affected by trade liberalization initiatives. 

This Administration’s record of support for the TAA program and 

worker training is strong. Spending on TAA has more than doubled 

since 2001, and this Administration has launched numerous initiatives to strengthen education, retrain workers, promote economic 

competitiveness, and generally ensure that America is prepared for 

the challenges of a global economy. 

The President recognizes that the Federal government has a responsibility to help displaced workers prepare for and find new 

jobs, or even new careers, and has made clear this Administration’s 

support for reforming job training programs and improving TAA. 

While the benefits of trade and investment liberalization are overwhelmingly positive, the Federal government has a duty to ensure 

that those benefits are more broadly shared and that the negative 

impacts that are borne by a few are offset in the form of assistance 

to persons and firms that may be adversely affected. 

In order to provide workers with meaningful assistance, the Department believes several fundamental TAA reforms are needed. 

First, the program must provide greater flexibility and enhanced 

access to training for eligible workers, including more opportunities 

to ‘‘earn and learn.’’ This means providing training, including parttime training, to workers who become reemployed and to certain 

incumbent workers threatened by layoffs. Rather than establishing 

a separate, duplicative bureaucracy, services should be provided 


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through a streamlined and efficient service delivery system that 

ensures workers participating in TAA have improved access to 

other reemployment services. The bill as drafted does not provide 

these needed reforms. 

The Department’s major concerns with the bill are outlined 

below. In addition, the Department notes that, since the bill has 

only recently been made available for review, we have not had a 

chance to assess the true costs, which we believe would be very 

substantial. We look forward to analyzing the provisions further as 

to the costs, tax implications, and proposed offsets. 

Expansion of TAA Eligibility to Workers Not Impacted By Trade. 

Under current law, to be certified as eligible to apply for assistance 

under TAA, a group of workers in a firm files a petition with the 

Secretary of Labor, who then determines whether layoffs or the 

threat of layoffs at the firm are related to trade. The bill would require, as an alternative to determinations relating to the workers’ firm, that the Secretary conduct an investigation for industry-wide 

determinations of eligibility. This approach fails to distinguish between layoffs related to trade and layoffs that are due to domestic 

competition, technology change, or other factors, since conditions 

for firms within industries can vary widely. In addition, the bill requires the Secretary of Labor to automatically certify as eligible for 

TAA workers in a domestic industry covered by an injury determination under U.S. anti-dumping, countervailing duty, or safeguard laws if such workers file a petition for certification under the 

TAA program. There would be no investigation, as required under 

current law, to determine if the particular layoffs at the firm are 

related to trade or due to other factors. Currently, workers certified 

for TAA are less than 5% of workers who exhaust their Unemployment Insurance (UI) benefits. By using industry-wide certification 

to bring large numbers of workers not affected by trade into TAA, 

caseloads and costs could easily increase severalfold. The Administration opposes converting TAA from a trade-impact targeted program to a universal unemployment insurance and training program. 

Expansion of TAA Eligibility to Service Sector and Public Agency 

Workers. Since the inception of the TAA program, the program has 

been targeted to workers involved in the production of an article. 

The bill expands TAA coverage to service sector workers whose job 

loss is related to increased imports of services, shifts in the provision of services to foreign countries, or who provide a service to a 

firm with TAA-certified workers. The bill would also expand eligibility to workers in public agencies. These expansions raise issues 

of workability (since there is limited data available on trade in 

services) and appropriateness of coverage (since services are a 

growing economic sector). 

Duplicative Bureaucracy. Under current law, the Secretary of 

Labor is required to make every reasonable effort to arrange for 

the provision of employment services to TAA-certified workers 

under other Federal laws. This promotes coordination of Federal 

employment resources. The One-Stop Career Center system under 

Workforce Investment Act (WIA) provides access to a wide array of 

such services. However, instead of linking to the existing public 

workforce investment system, the bill requires the Secretary diVerDate Aug 31 2005 07:39 Oct 30, 2007 Jkt 069006 PO 00000 Frm 00127 Fmt 6604 Sfmt 6602 E:\HR\OC\HR414P1.XXX HR414P1

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rectly, or through the TAA agreements with the States, to provide 

specified employment services to TAA participants. The bill also 

adds two new funding sources within TAA to fund these services, 

although it is unclear how these services are intended to be provided if the new funding is exhausted. The Department believes 

separately funding these services under the TAA program would 

duplicate services already available under WIA. 

In addition, the bill requires that all determinations of eligibility 

for training and trade readjustment allowances, as well as the administration of funds for case management and employment services, be carried out exclusively by state government employees (socalled ‘‘merit staff’’). There is no evidence that suggests merit staff 

employees would carry out such activities more effectively than 

other types of employees. Mandating the use of merit staff would 

preclude State flexibility in determining how best to administer 

these activities, and would also hinder coordination with other programs in the One-Stop Career Center system that can benefit TAA 

workers. 

Extension of Wage Insurance. The ATAA/Wage Insurance program was enacted as a 5-year demonstration project. The Department is not aware of evidence that justifies expansion of this 

model, and we believe there are questions as to whether this approach helps workers in the long term. 

Expansion of Income Support. The bill provides an additional 26 

weeks of Trade Readjustment Allowances (income support) for 

workers who are participating in training. Under current law, 

workers may receive up to 104 weeks of income support if participating in training, and up to 130 weeks if the training includes remedial education. Therefore, the bill provides for up to 130 weeks 

generally for participants in training, and up to 156 weeks where 

the training includes remedial education or prerequisites. The Department believes the current duration of income support is sufficient to assist workers who are in training, to help them return to 

the workforce. 

Incentive Payments to Expand State UI Eligibility. The Department of Labor strongly opposes the provisions in the bill for incentive payments to those States that include specified benefit expansions in their State Unemployment Insurance (UI) program. UI 

benefit eligibility should continue to be a matter determined by the 

States, without special incentive payments promoting uniform national eligibility standards. Some States have already adopted 

these eligibility provisions and have been willing to absorb the 

costs of those expansions using State UI funds (although those 

States would also now receive these funds under this provision). 

These payments would only cover the new benefit outlays for a few 

years, after which State taxes would have to be increased to continue to support the benefit expansions. The Department does not 

believe these funds should be diverted from their current purpose, 

which is to make loans to States to pay UI benefits when State accounts become insolvent. 

Expansion of Health Coverage Tax Credit. The bill also includes 

a number of changes to the Health Coverage Tax Credit (HCTC), 

which provides certain TAA and Pension Benefit Guaranty Corporation benefit recipients with a 65% credit for the costs of certain 


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qualified health insurance. The bill would expand the credit to 

cover 85% of such insurance, would extend the period of time during which beneficiaries receive the subsidy, and would require 

qualifying insurance to meet specific rating rules. The bill is inconsistent with the President’s proposed modifications to the HCTC. 

The Department is concerned about expanding this government 

subsidy and introducing Federal regulations about health insurance pricing as well as the potential impacts of these changes. 

The Department has other concerns regarding the bill, which we 

would be pleased to discuss with the Committee. 

While the Administration strongly opposes this bill as drafted, 

we are committed to working with Congress to identify and enact 

into law improvements that would make TAA a more flexible and 

beneficial program that fulfills the government’s responsibility to 

assist in returning to the workforce those workers adversely affected by trade liberalizing agreements. 

The Office of Management and Budget advises that there is no 

objection to the submission of this report from the standpoint of the 

Administration’s program. 

Sincerely, 

ELAINE L. CHAO. 

Æ 


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