I

104TH CONGRESS

2D SESSION H. R. 3241

To amend the Internal Revenue Code to allow the designation of additional

empowerment zones and provide additional incentives for empowerment

zones and enterprise communities, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 15, 1996

Mr. FOGLIETTA (for himself, Mr. BARRETT of Wisconsin, Mr. DELLUMS, Ms.

EDDIE BERNICE JOHNSON of Texas, Mr. GENE GREEN of Texas, Mr.

CLYBURN, Mr. HINCHEY, Ms. NORTON, Mr. HASTINGS of Florida, Miss

COLLINS of Michigan, and Ms. MCKINNEY) introduced the following bill;

which was referred to the Committee on Ways and Means, and in addition to the Committees on Banking and Financial Services, Government

Reform and Oversight, Transportation and Infrastructure, Economic and

Educational Opportunities, International Relations, Commerce, the Judiciary, National Security, and Small Business, for a period to be subsequently determined by the Speaker, in each case for consideration of such

provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend the Internal Revenue Code to allow the designation of additional empowerment zones and provide additional incentives for empowerment zones and enterprise

communities, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘More Power for Empowerment Zones Act of 1996’’.

4 (b) TABLE OF CONTENTS.—The table of contents for

5 this Act is as follows:

Sec. 1. Short title and table of contents.

TITLE I—TAX TREATMENT OF EMPOWERMENT ZONES AND

ENTERPRISE COMMUNITIES

Subtitle A—Designation of Additional Empowerment Zones

Sec. 101. Designation of additional empowerment zones.

Subtitle B—Increased Incentives for Empowerments Zones and Enterprise

Communities

Sec. 111. Treatment of bonds issued by governments in empowerment zones

and enterprise communities.

Sec. 112. Expanded definition of empowerment zone for purposes of increased

expensing.

Sec. 113. Additional expensing for empowerment zones and enterprise communities.

Sec. 114. Additional incentives for empowerment zones and enterprise communities.

Sec. 115. Commercial revitalization tax credit.

Subtitle C—Brownfields Redevelopment Act

Sec. 121. Environmental remediation tax credit for contaminated sites in

empowerment zones.

Sec. 122. Use of redevelopment bonds for environmental remediation in

empowerment zones.

TITLE II—ASSISTANCE FOR INFRASTRUCTURE IMPROVEMENTS

AND DEVELOPMENT

Sec. 201. Loan guarantees.

Sec. 202. Revolving fund for loans.

Sec. 203. Grants to units of general local government.

Sec. 204. Eligible units of general local government.

Sec. 205. Infrastructure activities.

Sec. 206. Definitions.

Sec. 207. Regulations.

TITLE III—ADDITIONAL BENEFITS FOR EMPOWERMENT ZONES

AND ENTERPRISE COMMUNITIES

Sec. 301. Education grants.

Sec. 302. Minimum allocation of foreign assistance for purchase of certain

United States goods.
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Sec. 303. Requirement for Federal government to procure 15 percent of goods

and services from businesses located in empowerment zones

and enterprise communities.

Sec. 304. Requirement for Federal government to procure recycled materials

from entities located in empowerment zones.

Sec. 305. Get empowerment zones moving program.

TITLE IV—REGULATORY FLEXIBILITY

Sec. 401. Definition of small entities in employment zones and enterprise communities for analysis of regulatory functions.

Sec. 402. Waiver or modification of agency rules in empowerment zones and enterprise communities.

1 TITLE I—TAX TREATMENT OF

2 EMPOWERMENT ZONES AND

3 ENTERPRISE COMMUNITIES

4 Subtitle A—Designation of

5 Additional Empowerment Zones

6 SEC. 101. DESIGNATION OF ADDITIONAL EMPOWERMENT

7 ZONES.

8 (a) IN GENERAL.—Section 1391 of the Internal Rev9 enue Code of 1986 (relating to designation procedure for

10 empowerment zones and enterprise communities) is

11 amended by adding at the end the following new sub12 section:

13 ‘‘(g) DESIGNATIONS OF ADDITIONAL EMPOWERMENT

14 ZONES.—

15 ‘‘(1) IN GENERAL.—In addition to the areas

16 designated under subsection (a), the appropriate

17 Secretaries may designate in the aggregate an addi18 tional 9 nominated areas as empowerment zones

19 under this section, subject to the availability of eligi-
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1 ble nominated areas. Of that number, not more than

2 6 may be designated in urban areas and not more

3 than 3 may be designated in rural areas.

4 ‘‘(2) PERIOD DESIGNATIONS MAY BE MADE.—

5 Notwithstanding subsection (c), a designation may

6 be made under this subsection in 1997 or 1998.’’

7 (b) APPLICATION OF EMPLOYMENT CREDIT TO NEW

8 EMPOWERMENT ZONES.—Subsection (b) of section 1396

9 of such Code (relating to empowerment zone employment

10 credit) is amended—

11 (1) by amending so much of the subsection as

12 precedes the table to read as follows:

13 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of

14 this section—

15 ‘‘(1) IN GENERAL.—Except as provided in para16 graph (2), the term ‘applicable percentage’ means

17 the percentage determined in accordance with the

18 following table:’’, and

19 (2) by adding at the end the following new

20 paragraph:

21 ‘‘(2) APPLICATION TO EMPOWERMENT ZONES

22 DESIGNATED UNDER SECTION 1391(g).—In the case

23 of any empowerment zone designated under section

24 1391(g), the term ‘applicable percentage’ means the
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1 percentage determined in accordance with the follow2 ing table:

‘‘In the case of wages paid or The applicable

incurred during calendar year: percentage is:

1997 through 2004 ................................................... 20

2005 .......................................................................... 15

2006 .......................................................................... 10

2007 .......................................................................... 5.’’

3 (c) CONFORMING AMENDMENT.—Subsections (e) and

4 (f) of section 1391 of such Code are each amended by

5 striking ‘‘subsection (a)’’ and inserting ‘‘this section’’.

6 Subtitle B—Increased Incentives

7 for Empowerments Zones and

8 Enterprise Communities

9 SEC. 111. TREATMENT OF BONDS ISSUED BY GOVERN10 MENTS IN EMPOWERMENT ZONES AND EN11 TERPRISE COMMUNITIES.

12 (a) ALLOWANCE OF FEDERAL GUARANTEES FOR

13 CERTAIN TAX EXEMPT STATE AND LOCAL BONDS FOR

14 EMPOWERMENT ZONES AND ENTERPRISE COMMU15 NITIES.—

16 (1) IN GENERAL.—Paragraph (3) of section

17 149(b) of the Internal Revenue Code of 1986 (relat18 ing to Federally guaranteed bond is not tax exempt)

19 is amended by adding at the end the following new

20 paragraph:
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1 ‘‘(E) EXEMPT FACILITY BONDS.—Para2 graph (1) shall not apply to any exempt facility

3 bond (as defined in section 1394).’’

4 (2) EFFECTIVE DATE.—The amendment made

5 by this subsection shall apply to bonds issued after

6 the date of the enactment of this Act.

7 (b) INCREASE IN LIMITATION ON TAX-EXEMPT EN8 TERPRISE ZONE FACILITY BONDS.—Subparagraph (B) of

9 section 1394(c)(1) of such Code (relating to tax-exempt

10 enterprise zone facility bonds) is amended by striking

11 ‘‘$20,000,000’’ and inserting ‘‘$40,000,000’’.

12 (c) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to bonds issued after the date of

14 the enactment of this Act.

15 SEC. 112. EXPANDED DEFINITION OF EMPOWERMENT ZONE

16 FOR PURPOSES OF INCREASED EXPENSING.

17 (a) IN GENERAL.—Section 1397A of the Internal

18 Revenue Code of 1986 (relating to increase in expensing

19 under section 179) is amended by adding at the end the

20 following new subsection:

21 ‘‘(c) ENTERPRISE ZONE BUSINESS.—

22 ‘‘(1) IN GENERAL.—For purposes of this sec23 tion, the term ‘enterprise zone business’ has the

24 meaning given such term by section 1397B, except

25 that subsections (b)(6) and (c)(5) of section 1397B
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1 shall be applied by treating any empowerment zone

2 as including the qualified surrounding area.

3 ‘‘(2) QUALIFIED SURROUNDING AREA.—

4 ‘‘(A) IN GENERAL.—For purposes of para5 graph (1), the term ‘qualified surrounding area’

6 means, with respect to any empowerment zone

7 (or any noncontiguous portion of such zone) the

8 area of not more than 1 mile in radius which—

9 ‘‘(i) surrounds and is contiguous with

10 such zone (or such portion),

11 ‘‘(ii) is designated for purposes of this

12 paragraph by each State and local govern13 ment which nominated such zone for des14 ignation under section 1391, and

15 ‘‘(iii) meets the requirements of sec16 tion 1392(a).

17 ‘‘(B) EXPANSION TO 2-MILE RADIUS BY

18 APPROPRIATE SECRETARY.—Upon the request

19 of each of the States and local governments re20 ferred to in subparagraph (A)(ii), the appro21 priate Secretary may increase the 1 mile dis22 tance under subparagraph (A) by not more

23 than 1 additional mile. Such Secretary shall de24 termine whether and by how much to increase
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1 such distance based on criteria published by

2 such Secretary.’’

3 (b) EFFECTIVE DATE.—The amendment made by

4 this section shall apply to taxable years ending after the

5 date of the enactment of this Act.

6 SEC. 113. ADDITIONAL EXPENSING FOR EMPOWERMENT

7 ZONES AND ENTERPRISE COMMUNITIES.

8 (a) IN GENERAL.—Section 1397A of the Internal

9 Revenue Code of 1986 (relating to increase in expensing

10 under section 179) is amended—

11 (1) in subparagraph (A) of subsection (a)(1),

12 by striking ‘‘$20,000’’ and inserting ‘‘$35,000’’, and

13 (2) by adding at the end the following new sub14 section:

15 ‘‘(c) ENTERPRISE ZONE BUSINESS.—For purposes of

16 this section, the term ‘enterprise zone business’ has the

17 meaning given such term by section 1397B, except that

18 in applying such section references to empowerment zones

19 shall be treated as including references to enterprise com20 munities.’’

21 (b) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to taxable years ending after the

23 date of the enactment of this Act.
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1 SEC. 114. ADDITIONAL INCENTIVES FOR EMPOWERMENT

2 ZONES AND ENTERPRISE COMMUNITIES.

3 (a) IN GENERAL.—Subchapter U of chapter 1 of the

4 Internal Revenue Code of 1986 (relating to designation

5 and treatment of empowerment zones, enterprise commu6 nities, and rural development investment areas) is amend7 ed—

8 (1) by redesignating part IV as part V,

9 (2) by redesignating section 1397D as section

10 1397F, and

11 (3) by inserting after part III the following new

12 part:

13 ‘‘PART IV—ADDITIONAL INCENTIVES FOR

14 EMPOWERMENT ZONES AND ENTERPRISE

15 COMMUNITIES

‘‘Sec. 1397D. Empowerment zone and enterprise community capital gain.

‘‘Sec. 1397E. Empowerment zone and enterprise community

stock.

16 ‘‘SEC. 1397D. EMPOWERMENT ZONE AND ENTERPRISE COM17 MUNITY CAPITAL GAIN.

18 ‘‘(a) GENERAL RULE.—Gross income does not in19 clude any qualified capital gain recognized by a qualified

20 taxpayer on the sale or exchange of a qualified zone asset

21 held for more than 5 years.

22 ‘‘(b) QUALIFIED ZONE ASSET.—For purposes of this

23 section—
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1 ‘‘(1) IN GENERAL.—The term ‘qualified zone

2 asset’ means—

3 ‘‘(A) any qualified zone stock,

4 ‘‘(B) any qualified zone business property,

5 and

6 ‘‘(C) any qualified zone partnership inter7 est.

8 ‘‘(2) QUALIFIED ZONE STOCK.—

9 ‘‘(A) IN GENERAL.—Except as provided in

10 subparagraph (B), the term ‘qualified zone

11 stock’ means any stock in a domestic corpora12 tion if—

13 ‘‘(i) such stock is acquired by the tax14 payer on original issue from the corpora15 tion solely in exchange for cash,

16 ‘‘(ii) as of the time such stock was is17 sued, such corporation was an enterprise

18 zone business (or, in the case of a new cor19 poration, such corporation was being orga20 nized for purposes of being an enterprise

21 zone business), and

22 ‘‘(iii) during substantially all of the

23 taxpayer’s holding period for such stock,

24 such corporation qualified as an enterprise

25 zone business.
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1 ‘‘(B) EXCLUSION OF STOCK FOR WHICH

2 DEDUCTION UNDER SECTION 1397E AL3 LOWED.—The term ‘qualified zone stock’ shall

4 not include any stock the basis of which is re5 duced under section 1397E.

6 ‘‘(C) REDEMPTIONS.—The term ‘qualified

7 zone stock’ shall not include any stock acquired

8 from a corporation which made a substantial

9 stock redemption or distribution (without a

10 bona fide business purpose therefor) in an at11 tempt to avoid the purposes of this section.

12 ‘‘(3) QUALIFIED ZONE BUSINESS PROPERTY.—

13 ‘‘(A) IN GENERAL.—The term ‘qualified

14 zone business property’ means tangible property

15 if—

16 ‘‘(i) such property was acquired by

17 the taxpayer by purchase (as defined in

18 section 179(d)(2)) after the date on which

19 the designation of the empowerment zone

20 or enterprise community took effect,

21 ‘‘(ii) the original use of such property

22 in the empowerment zone or enterprise

23 community commences with the taxpayer,

24 and
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1 ‘‘(iii) during substantially all of the

2 taxpayer’s holding period for such prop3 erty, substantially all of the use of such

4 property was in an enterprise zone busi5 ness of the taxpayer.

6 ‘‘(B) SPECIAL RULE FOR SUBSTANTIAL IM7 PROVEMENTS.—

8 ‘‘(i) IN GENERAL.—The requirements

9 of clauses (i) and (ii) of subparagraph (A)

10 shall be treated as satisfied with respect

11 to—

12 ‘‘(I) property which is substan13 tially improved by the taxpayer, and

14 ‘‘(II) any land on which such

15 property is located.

16 ‘‘(ii) SUBSTANTIAL IMPROVEMENT.—

17 For purposes of clause (i), property shall

18 be treated as substantially improved by the

19 taxpayer if, during any 24-month period

20 beginning after the date on which the des21 ignation of the empowerment zone or en22 terprise community took effect, additions

23 to basis with respect to such property in

24 the hands of the taxpayer exceed the great25 er of—
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1 ‘‘(I) an amount equal to the ad2 justed basis at the beginning of such

3 24-month period in the hands of the

4 taxpayer, or

5 ‘‘(II) $5,000.

6 ‘‘(C) LIMITATION ON LAND.—The term

7 ‘qualified zone business property’ shall not in8 clude land which is not an integral part of an

9 enterprise zone business.

10 ‘‘(4) QUALIFIED ZONE PARTNERSHIP INTER11 EST.—The term ‘qualified zone partnership interest’

12 means any interest in a partnership if—

13 ‘‘(A) such interest is acquired by the tax14 payer from the partnership solely in exchange

15 for cash,

16 ‘‘(B) as of the time such interest was ac17 quired, such partnership was an enterprise zone

18 business (or, in the case of a new partnership,

19 such partnership was being organized for pur20 poses of being an enterprise zone business), and

21 ‘‘(C) during substantially all of the tax22 payer’s holding period for such interest, such

23 partnership qualified as an enterprise zone

24 business.
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1 A rule similar to the rule of paragraph (2)(C) shall

2 apply for purposes of this paragraph.

3 ‘‘(5) TREATMENT OF SUBSEQUENT PUR4 CHASERS.—The term ‘qualified zone asset’ includes

5 any property which would be a qualified zone asset

6 but for paragraph (2)(A)(i), (3)(A)(ii), or (4)(A) in

7 the hands of the taxpayer if such property was a

8 qualified zone asset in the hands of all prior holders.

9 ‘‘(6) 10-YEAR SAFE HARBOR.—If any property

10 ceases to be a qualified zone asset by reason of para11 graph (2)(A)(iii), (3)(A)(iii), or (4)(C) after the 10-

12 year period beginning on the date the taxpayer ac13 quired such property, such property shall continue to

14 be treated as meeting the requirements of such

15 paragraph; except that the amount of gain to which

16 subsection (a) applies on any sale or exchange of

17 such property shall not exceed the amount which

18 would be qualified capital gain had such property

19 been sold on the date of such cessation.

20 ‘‘(7) TREATMENT OF ZONE TERMINATIONS.—

21 The termination of any designation of an area as an

22 empowerment zone or enterprise community shall be

23 disregarded for purposes of determining whether any

24 property is a qualified zone asset.
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1 ‘‘(c) OTHER DEFINITIONS AND SPECIAL RULES.—

2 For purposes of this section—

3 ‘‘(1) QUALIFIED CAPITAL GAIN.—Except as

4 otherwise provided in this subsection, the term

5 ‘qualified capital gain’ means any long-term capital

6 gain recognized on the sale or exchange of a quali7 fied zone asset held for more than 5 years.

8 ‘‘(2) CERTAIN GAIN ON REAL PROPERTY NOT

9 QUALIFIED.—The term ‘qualified capital gain’ shall

10 not include any gain which would be treated as ordi11 nary income under section 1250 if section 1250 ap12 plied to all depreciation rather than the additional

13 depreciation.

14 ‘‘(3) GAIN ATTRIBUTABLE TO PERIODS AFTER

15 TERMINATION OF ZONE DESIGNATION NOT QUALI16 FIED.—The term ‘qualified capital gain’ shall not in17 clude any gain attributable to periods after the ter18 mination of any designation of an area as an

19 empowerment zone or enterprise community.

20 ‘‘(4) RELATED PARTY TRANSACTIONS.—The

21 term ‘qualified capital gain’ shall not include any

22 gain attributable, directly or indirectly, in whole or

23 in part, to a transaction with a related person.

24 ‘‘(5) QUALIFIED TAXPAYER.—The term ‘quali25 fied taxpayer’ means any taxpayer if the amount in-
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1 vested by the taxpayer in infrastructure activities (as

2 defined in section 205 of the More Power for

3 Empowerment Zones Act of 1996, as in effect imme4 diately after the enactment of this section) in any

5 empowerment zone or enterprise community during

6 the taxable year is equal to 50 percent or more of

7 the qualified capital gain recognized in such taxable

8 year.

9 ‘‘(6) ENTERPRISE ZONE BUSINESS.—The term

10 ‘enterprise zone business’ has the meaning given

11 such term by section 1394(b)(3), except that, in ap12 plying section 1394(b)(3), the term ‘qualified busi13 ness’ shall not include any trade or business of pro14 ducing property of a character subject to the allow15 ance for depletion under section 611.

16 ‘‘(d) TREATMENT OF PASS-THRU ENTITIES.—

17 ‘‘(1) SALES AND EXCHANGES.—Gain on the

18 sale or exchange of an interest in a pass-thru entity

19 held by the taxpayer (other than an interest in an

20 entity which was an enterprise zone business during

21 substantially all of the period the taxpayer held such

22 interest) for more than 5 years shall be treated as

23 gain described in subsection (a) to the extent such

24 gain is attributable to amounts which would be

25 qualified capital gain on qualified zone assets (deter-
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1 mined as if such assets had been sold on the date

2 of the sale or exchange) held by such entity for more

3 than 5 years and throughout the period the taxpayer

4 held such interest. A rule similar to the rule of para5 graph (2)(C) shall apply for purposes of the preced6 ing sentence.

7 ‘‘(2) INCOME INCLUSIONS.—

8 ‘‘(A) IN GENERAL.—Any amount included

9 in income by reason of holding an interest in a

10 pass-thru entity (other than an entity which

11 was an enterprise zone business during substan12 tially all of the period the taxpayer held the in13 terest to which such inclusion relates) shall be

14 treated as gain described in subsection (a) if

15 such amount meets the requirements of sub16 paragraph (B).

17 ‘‘(B) REQUIREMENTS.—An amount meets

18 the requirements of this subparagraph if—

19 ‘‘(i) such amount is attributable to

20 qualified capital gain recognized on the

21 sale or exchange by the pass-thru entity of

22 property which is a qualified zone asset in

23 the hands of such entity and which was

24 held by such entity for the period required

25 under subsection (a), and
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1 ‘‘(ii) such amount is includible in the

2 gross income of the taxpayer by reason of

3 the holding of an interest in such entity

4 which was held by the taxpayer on the date

5 on which such pass-thru entity acquired

6 such asset and at all times thereafter be7 fore the disposition of such asset by such

8 pass-thru entity.

9 ‘‘(C) LIMITATION BASED ON INTEREST

10 ORIGINALLY HELD BY TAXPAYER.—Subpara11 graph (A) shall not apply to any amount to the

12 extent such amount exceeds the amount to

13 which subparagraph (A) would have applied if

14 such amount were determined by reference to

15 the interest the taxpayer held in the pass-thru

16 entity on the date the qualified zone asset was

17 acquired.

18 ‘‘(3) PASS-THRU ENTITY.—For purposes of this

19 subsection, the term ‘pass-thru entity’ means—

20 ‘‘(A) any partnership,

21 ‘‘(B) any S corporation,

22 ‘‘(C) any regulated investment company,

23 and

24 ‘‘(D) any common trust fund.
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1 ‘‘(e) SALES AND EXCHANGES OF INTERESTS IN

2 PARTNERSHIPS AND S CORPORATIONS WHICH ARE

3 QUALIFIED ZONE BUSINESSES.—In the case of the sale

4 or exchange of an interest in a partnership, or of stock

5 in an S corporation, which was an enterprise zone business

6 during substantially all of the period the taxpayer held

7 such interest or stock, the amount of qualified capital gain

8 shall be determined without regard to—

9 ‘‘(1) any intangible, and any land, which is not

10 an integral part of any qualified business (as defined

11 in section 1397B(d) except that references to

12 empowerment zones shall be treated as including ref13 erences to enterprise communities), and

14 ‘‘(2) gain attributable to periods before the des15 ignation of an area as an empowerment zone or en16 terprise community.

17 ‘‘(f) CERTAIN TAX-FREE AND OTHER TRANSFERS.—

18 For purposes of this section—

19 ‘‘(1) IN GENERAL.—In the case of a transfer of

20 a qualified zone asset to which this subsection ap21 plies, the transferee shall be treated as—

22 ‘‘(A) having acquired such asset in the

23 same manner as the transferor, and

24 ‘‘(B) having held such asset during any

25 continuous period immediately preceding the
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1 transfer during which it was held (or treated as

2 held under this subsection) by the transferor.

3 ‘‘(2) TRANSFERS TO WHICH SUBSECTION AP4 PLIES.—This subsection shall apply to any trans5 fer—

6 ‘‘(A) by gift,

7 ‘‘(B) at death, or

8 ‘‘(C) from a partnership to a partner

9 thereof of a qualified zone asset with respect to

10 which the requirements of subsection (d)(2) are

11 met at the time of the transfer (without regard

12 to the 5-year holding requirement).

13 ‘‘(3) CERTAIN RULES MADE APPLICABLE.—

14 Rules similar to the rules of section 1244(d)(2) shall

15 apply for purposes of this section.

16 ‘‘SEC. 1397E. EMPOWERMENT ZONE AND ENTERPRISE COM17 MUNITY STOCK.

18 ‘‘(a) GENERAL RULE.—At the election of any individ19 ual, the aggregate amount paid by such taxpayer during

20 the taxable year for the purchase of enterprise zone stock

21 on the original issue of such stock by a qualified issuer

22 shall be allowed as a deduction.

23 ‘‘(b) LIMITATIONS.—

24 ‘‘(1) CEILING.—
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1 ‘‘(A) IN GENERAL.—The maximum

2 amount allowed as a deduction under subsection

3 (a) to a taxpayer shall not exceed—

4 ‘‘(i) $100,000 for any taxable year,

5 and

6 ‘‘(ii) when added to the aggregate

7 amount allowed as a deduction under this

8 section in all prior years, $500,000.

9 ‘‘(B) EXCESS AMOUNTS.—If the amount

10 otherwise deductible by any person under sub11 section (a) exceeds the limitation under—

12 ‘‘(i) subparagraph (A)(i), the amount

13 of such excess shall be treated as an

14 amount paid in the next taxable year, and

15 ‘‘(ii) subparagraph (A), the deduction

16 allowed for any taxable year shall be allo17 cated proportionately among the enterprise

18 zone stock purchased by such person on

19 the basis of the respective purchase prices

20 per share.

21 ‘‘(2) RELATED PERSON.—The taxpayer and

22 members of the taxpayer’s family shall be treated as

23 one person for purposes of paragraph (1) and the

24 limitations contained in such paragraph shall be al25 located among the taxpayer and such members in
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1 accordance with their respective purchases of enter2 prise zone stock. For purposes of this paragraph, an

3 individual’s family includes only such individual’s

4 spouse and minor children.

5 ‘‘(3) PARTIAL TAXABLE YEAR.—If designation

6 of an area as an empowerment zone or enterprise

7 community occurs, expires, or is revoked pursuant to

8 section 1391 on a date other than the first or last

9 day of the taxable year of the taxpayer, or in the

10 case of a short taxable year, the limitations specified

11 in paragraph (1) shall be adjusted on a pro rata

12 basis (based upon the number of days).

13 ‘‘(c) ENTERPRISE ZONE STOCK.—For purposes of

14 this section—

15 ‘‘(1) IN GENERAL.—The term ‘enterprise zone

16 stock’ means stock of a corporation if—

17 ‘‘(A) such stock is acquired on original

18 issue from the corporation, and

19 ‘‘(B) such corporation is, at the time of

20 issue, a qualified enterprise zone issuer.

21 ‘‘(2) PROCEEDS MUST BE INVESTED IN QUALI22 FIED ENTERPRISE ZONE PROPERTY.—

23 ‘‘(A) IN GENERAL.—Such term shall in24 clude such stock only to the extent that the pro25 ceeds of such issuance are used by such issuer
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1 during the 12-month period beginning on the

2 date of issuance to purchase (as defined in sec3 tion 179(d)(2)) qualified enterprise zone prop4 erty.

5 ‘‘(B) QUALIFIED ENTERPRISE ZONE PROP6 ERTY.—For purposes of this section, the term

7 ‘qualified enterprise zone property’ means prop8 erty to which section 168 applies (or would

9 apply but for section 179)—

10 ‘‘(i) the original use of which com11 mences in an empowerment zone or enter12 prise community with the issuer, and

13 ‘‘(ii) substantially all of the use of

14 which is in such empowerment zone or en15 terprise community.

16 ‘‘(3) REDEMPTIONS.—The term ‘enterprise

17 zone stock’ shall not include any stock acquired from

18 a corporation which made a substantial stock re19 demption or distribution (without a bona fide busi20 ness purpose therefor) in an attempt to avoid the

21 purposes of this section.

22 ‘‘(d) QUALIFIED ENTERPRISE ZONE ISSUER.—For

23 purposes of this section, the term ‘qualified enterprise

24 zone issuer’ means any domestic C corporation if—
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1 ‘‘(1) such corporation is a corporation described

2 in section 1397B(b) (except that in applying such

3 section any references to an empowerment zone shall

4 be treated as including a reference to an enterprise

5 community) or, in the case of a new corporation,

6 such corporation is being organized for purposes of

7 being such a corporation,

8 ‘‘(2) such corporation does not have more than

9 one class of stock,

10 ‘‘(3) the sum of—

11 ‘‘(A) the money,

12 ‘‘(B) the aggregate unadjusted bases of

13 property owned by such corporation, and

14 ‘‘(C) the value of property leased to the

15 corporation (as determined under regulations

16 prescribed by the Secretary),

17 does not exceed $50,000,000, and

18 ‘‘(4) more than 20 percent of the total voting

19 power, and 20 percent of the total value, of the

20 stock of such corporation is owned directly by indi21 viduals or estates or indirectly by individuals

22 through partnerships or trusts.

23 The determination under paragraph (3) shall be made as

24 of the time of issuance of the stock in question but shall

25 include amounts received for such stock.
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1 ‘‘(e) DISPOSITIONS OF STOCK.—

2 ‘‘(1) BASIS REDUCTION.—For purposes of this

3 title, the basis of any enterprise zone stock shall be

4 reduced by the amount of the deduction allowed

5 under this section with respect to such stock.

6 ‘‘(2) DEDUCTION RECAPTURED AS ORDINARY

7 INCOME.—For purposes of section 1245—

8 ‘‘(A) any stock the basis of which is re9 duced under paragraph (1) (and any other

10 property the basis of which is determined in

11 whole or in part by reference to the adjusted

12 basis of such stock) shall be treated as section

13 1245 property, and

14 ‘‘(B) any reduction under paragraph (1)

15 shall be treated as a deduction allowed for de16 preciation.

17 If an exchange of any stock described in paragraph

18 (1) qualifies under section 354(a), 355(a), or

19 356(a), the amount of gain recognized under section

20 1245 by reason of this paragraph shall not exceed

21 the amount of gain recognized in the exchange (de22 termined without regard to this paragraph).

23 ‘‘(3) CERTAIN EVENTS TREATED AS DISPOSI24 TIONS.—For purposes of determining the amount

25 treated as ordinary income under section 1245 by
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1 reason of paragraph (2), paragraph (3) of section

2 1245(b) (relating to certain tax-free transactions)

3 shall not apply.

4 ‘‘(4) INTEREST CHARGED IF DISPOSITION

5 WITHIN 5 YEARS OF PURCHASE.—

6 ‘‘(A) IN GENERAL.—If—

7 ‘‘(i) a taxpayer disposes of any enter8 prise zone stock with respect to which a

9 deduction was allowed under subsection (a)

10 (or any other property the basis of which

11 is determined in whole or in part by ref12 erence to the adjusted basis of such stock)

13 before the end of the 5-year period begin14 ning on the date such stock was purchased

15 by the taxpayer, and

16 ‘‘(ii) section 1245(a) applies to such

17 disposition by reason of paragraph (2),

18 then the tax imposed by this chapter for the

19 taxable year in which such disposition occurs

20 shall be increased by the amount determined

21 under subparagraph (B).

22 ‘‘(B) ADDITIONAL AMOUNT.—For purposes

23 of subparagraph (A), the additional amount

24 shall be equal to the amount of interest (deter-
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1 mined at the rate applicable under section

2 6621(a)(2)) that would accrue—

3 ‘‘(i) during the period beginning on

4 the date the stock was purchased by the

5 taxpayer and ending on the date of such

6 disposition by the taxpayer, and

7 ‘‘(ii) on an amount equal to the aggre8 gate decrease in tax of the taxpayer result9 ing from the deduction allowed under this

10 subsection (a) with respect to such stock.

11 ‘‘(C) SPECIAL RULE.—Any increase in tax

12 under subparagraph (A) shall not be treated as

13 a tax imposed by this chapter for purposes of—

14 ‘‘(i) determining the amount of any

15 credit allowable under this chapter, and

16 ‘‘(ii) determining the amount of the

17 tax imposed by section 55.

18 ‘‘(f) DISQUALIFICATION.—

19 ‘‘(1) ISSUER CEASES TO QUALIFY.—If, during

20 the 10-year period beginning on the date enterprise

21 zone stock was purchased by the taxpayer, the issuer

22 of such stock ceases to be a qualified enterprise zone

23 issuer (determined without regard to subsection

24 (d)(3)), then notwithstanding any provision of this

25 subtitle other than paragraph (2), the taxpayer shall
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1 be treated for purposes of subsection (e) as dispos2 ing of such stock (and any other property the basis

3 of which is determined in whole or in part by ref4 erence to the adjusted basis of such stock) during

5 the taxable year during which such cessation occurs

6 at its fair market value as of the 1st day of such

7 taxable year.

8 ‘‘(2) CESSATION OF ENTERPRISE ZONE STATUS

9 NOT TO CAUSE RECAPTURE.—A corporation shall

10 not fail to be treated as a qualified enterprise zone

11 issuer for purposes of paragraph (1) solely by reason

12 of the termination or revocation of a designation as

13 an empowerment zone or enterprise community, as

14 the case may be.

15 ‘‘(g) OTHER SPECIAL RULES.—

16 ‘‘(1) APPLICATION OF LIMITS TO PARTNER17 SHIPS AND S CORPORATIONS.—In the case of a part18 nership or an S corporation, the limitations under

19 subsection (b) shall apply at the partner and share20 holder level and shall not apply at the partnership

21 or corporation level.

22 ‘‘(2) DEDUCTION NOT ALLOWED TO ESTATES

23 AND TRUSTS.—Estates and trusts shall not be treat24 ed as individuals for purposes of this section.’’
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1 (b) TECHNICAL AMENDMENT.—Subsection (a) of

2 section 1016 of such Code (relating to adjustments to

3 basis) is amended by striking ‘‘and’’ at the end of para4 graph (24), by striking the period at the end of paragraph

5 (25) and inserting ‘‘, and’’; and by adding at the end the

6 following new paragraph:

7 ‘‘(26) to the extent provided in section

8 1397E(e), in the case of stock with respect to which

9 a deduction was allowed or allowable under section

10 1397E(a).’’

11 (c) CLERICAL AND CONFORMING AMENDMENTS.—

12 (1) The table of parts for subchapter U of such

13 Code is amended by striking the item relating to

14 part IV and inserting the following new items:

‘‘Part IV. Additional incentives for empowerment zones and enterprise communities.

‘‘Part V. Regulations.’’

15 (2) The table of sections for part V of sub16 chapter U of chapter 1 of such Code, as redesig17 nated by this section, is amended by redesignating

18 the item relating to section 1397D as section

19 1397F.

20 (3) Section 1397F of such Code, as so redesig21 nated, is amended by striking ‘‘and III’’ each place

22 it appears and inserting ‘‘, III, and IV’’.
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1 (d) EFFECTIVE DATE.—The amendments made by

2 this section apply to taxable years ending after the date

3 of the enactment of this Act.

4 SEC. 115. COMMERCIAL REVITALIZATION TAX CREDIT.

5 (a) ALLOWANCE OF CREDIT.—Section 46 of the In6 ternal Revenue Code of 1986 (relating to investment cred7 it) is amended by striking ‘‘and’’ at the end of paragraph

8 (2), by striking the period at the end of paragraph (3)

9 and inserting ‘‘, and’’, and by adding at the end the follow10 ing new paragraph:

11 ‘‘(4) the commercial revitalization credit.’’

12 (b) COMMERCIAL REVITALIZATION CREDIT.—Sub13 part E of part IV of subchapter A of chapter 1 of the

14 Internal Revenue Code of 1986 (relating to rules for com15 puting investment credit) is amended by inserting after

16 section 48 the following new section:

17 ‘‘SEC. 48A. COMMERCIAL REVITALIZATION CREDIT.

18 ‘‘(a) GENERAL RULE.—For purposes of section 46,

19 except as provided in subsection (e), the commercial revi20 talization credit for any taxable year is an amount equal

21 to the applicable percentage of the qualified revitalization

22 expenditures with respect to any qualified revitalization

23 building.

24 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of

25 this section—
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1 ‘‘(1) IN GENERAL.—The term ‘applicable per2 centage’ means—

3 ‘‘(A) 20 percent for the taxable year in

4 which a qualified revitalization building is

5 placed in service, or

6 ‘‘(B) at the election of the taxpayer, 5 per7 cent for each taxable year in the credit period.

8 The election under subparagraph (B), once made,

9 shall be irrevocable.

10 ‘‘(2) CREDIT PERIOD.—

11 ‘‘(A) IN GENERAL.—The term ‘credit pe12 riod’ means, with respect to any building, the

13 period of 10 taxable years beginning with the

14 taxable year in which the building is placed in

15 service.

16 ‘‘(B) APPLICABLE RULES.—Rules similar

17 to the rules under paragraphs (2) and (4) of

18 section 42(f) shall apply.

19 ‘‘(c) QUALIFIED REVITALIZATION BUILDINGS AND

20 EXPENDITURES.—For purposes of this section—

21 ‘‘(1) QUALIFIED REVITALIZATION BUILDING.—

22 The term ‘qualified revitalization building’ means

23 any building (and its structural components) if—

24 ‘‘(A) such building is located in an eligible

25 commercial revitalization area,
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1 ‘‘(B) a commercial revitalization credit

2 amount is allocated to the building under sub3 section (e), and

4 ‘‘(C) depreciation (or amortization in lieu

5 of depreciation) is allowable with respect to the

6 building.

7 ‘‘(2) QUALIFIED REHABILITATION EXPENDI8 TURE.—

9 ‘‘(A) IN GENERAL.—The term ‘qualified

10 rehabilitation expenditure’ means any amount

11 properly chargeable to capital account—

12 ‘‘(i) for property for which deprecia13 tion is allowable under section 168 and

14 which is—

15 ‘‘(I) nonresidential real property,

16 or

17 ‘‘(II) an addition or improvement

18 to property described in subclause (I),

19 ‘‘(ii) in connection with the construc20 tion or substantial rehabilitation or recon21 struction of a qualified revitalization build22 ing, or

23 ‘‘(iii) for the acquisition of land in

24 connection with the qualified revitalization

25 building.
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1 ‘‘(B) DOLLAR LIMITATION.—The aggre2 gate amount which may be treated as qualified

3 revitalization expenditures with respect to any

4 qualified revitalization building for any taxable

5 year shall not exceed $10,000,000, reduced by

6 any such expenditures with respect to the build7 ing taken into account by the taxpayer or any

8 predecessor in determining the amount of the

9 credit under this section for all preceding tax10 able years.

11 ‘‘(C) CERTAIN EXPENDITURES NOT IN12 CLUDED.—The term ‘qualified revitalization ex13 penditure’ does not include—

14 ‘‘(i) STRAIGHT LINE DEPRECIATION

15 MUST BE USED.—Any expenditure (other

16 than with respect to land acquisitions) with

17 respect to which the taxpayer does not use

18 the straight line method over a recovery

19 period determined under subsection (c) or

20 (g) of section 168. The preceding sentence

21 shall not apply to any expenditure to the

22 extent the alternative depreciation system

23 of section 168(g) applies to such expendi24 ture by reason of subparagraph (B) or (C)

25 of section 168(g)(1).
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1 ‘‘(ii) ACQUISITION COSTS.—The costs

2 of acquiring any building or interest there3 in and any land in connection with such

4 building to the extent that such costs ex5 ceed 30 percent of the qualified revitaliza6 tion expenditures determined without re7 gard to this clause.

8 ‘‘(iii) OTHER CREDITS.—Any expendi9 ture which the taxpayer may take into ac10 count in computing any other credit allow11 able under this part unless the taxpayer

12 elects to take the expenditure into account

13 only for purposes of this section.

14 ‘‘(3) ELIGIBLE COMMERCIAL REVITALIZATION

15 AREA.—The term ‘eligible commercial revitalization

16 area’ means an empowerment zone or enterprise

17 community designated under subchapter U.

18 ‘‘(4) SUBSTANTIAL REHABILITATION OR RE19 CONSTRUCTION.—For purposes of this subsection, a

20 rehabilitation or reconstruction shall be treated as a

21 substantial rehabilitation or reconstruction only if

22 the qualified revitalization expenditures in connec23 tion with the rehabilitation or reconstruction exceed

24 25 percent of the fair market value of the building
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1 (and its structural components) immediately before

2 the rehabilitation or reconstruction.

3 ‘‘(d) WHEN EXPENDITURES TAKEN INTO AC4 COUNT.—

5 ‘‘(1) IN GENERAL.—Qualified revitalization ex6 penditures with respect to any qualified revitaliza7 tion building shall be taken into account for the tax8 able year in which the qualified rehabilitated build9 ing is placed in service. For purposes of the preced10 ing sentence, a substantial rehabilitation or recon11 struction of a building shall be treated as a separate

12 building.

13 ‘‘(2) PROGRESS EXPENDITURE PAYMENTS.—

14 Rules similar to the rules of subsections (b)(2) and

15 (d) of section 47 shall apply for purposes of this sec16 tion.

17 ‘‘(e) LIMITATION ON AGGREGATE CREDITS ALLOW18 ABLE WITH RESPECT TO BUILDINGS LOCATED IN A

19 STATE.—

20 ‘‘(1) IN GENERAL.—The amount of the credit

21 determined under this section for any taxable year

22 with respect to any building shall not exceed the

23 commercial revitalization credit amount (in the case

24 of an amount determined under subsection

25 (b)(1)(B), the present value of such amount as de-
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1 termined under the rules of section 42(b)(2)(C)) al2 located to such building under this subsection by the

3 commercial revitalization credit agency. Such alloca4 tion shall be made at the same time and in the same

5 manner as under paragraphs (1) and (7) of section

6 42(h).

7 ‘‘(2) COMMERCIAL REVITALIZATION CREDIT

8 AMOUNT FOR AGENCIES.—

9 ‘‘(A) IN GENERAL.—The aggregate com10 mercial revitalization credit amount which a

11 commercial revitalization credit agency may al12 locate for any calendar year is the amount of

13 the State commercial revitalization credit ceil14 ing determined under this paragraph for such

15 calendar year for such agency.

16 ‘‘(B) STATE COMMERCIAL REVITALIZATION

17 CREDIT CEILING.—

18 ‘‘(i) IN GENERAL.—The State com19 mercial revitalization credit ceiling applica20 ble to any State for any calendar year is

21 $2,000,000 for each empowerment zone

22 and enterprise community in the State des23 ignated under subchapter U.

24 ‘‘(ii) SPECIAL RULE WHERE ZONE OR

25 COMMUNITY LOCATED IN MORE THAN 1
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1 STATE.—If an empowerment zone or enter2 prise community is located in more than 1

3 State, a State’s share of the amount speci4 fied in clause (i) with respect to such zone

5 or community shall be an amount that

6 bears the same ratio to $2,000,000 as the

7 population in the State bears to the popu8 lation in all States in which such zone or

9 community is located.

10 ‘‘(iii) OTHER SPECIAL RULES.—Rules

11 similar to the rules of subparagraphs (D),

12 (E), (F), and (G) of section 42(h)(3) shall

13 apply for purposes of this subsection.

14 ‘‘(C) COMMERCIAL REVITALIZATION CRED15 IT AGENCY.—For purposes of this section, the

16 term ‘commercial revitalization credit agency’

17 means any agency authorized by a State to

18 carry out this section.

19 ‘‘(f) RESPONSIBILITIES OF COMMERCIAL REVITAL20 IZATION CREDIT AGENCIES.—

21 ‘‘(1) PLANS FOR ALLOCATION.—Notwithstand22 ing any other provision of this section, the commer23 cial revitalization credit dollar amount with respect

24 to any building shall be zero unless—
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1 ‘‘(A) such amount was allocated pursuant

2 to a qualified allocation plan of the commercial

3 revitalization credit agency which is approved

4 by the governmental unit (in accordance with

5 rules similar to the rules of section 147(f)(2)

6 (other than subparagraph (B)(ii) thereof)) of

7 which such agency is a part, and

8 ‘‘(B) such agency notifies the chief execu9 tive officer (or its equivalent) of the local juris10 diction within which the building is located of

11 such project and provides such individual a rea12 sonable opportunity to comment on the project.

13 ‘‘(2) QUALIFIED ALLOCATION PLAN.—For pur14 poses of this subsection, the term ‘qualified alloca15 tion plan’ means any plan—

16 ‘‘(A) which sets forth selection criteria to

17 be used to determine priorities of the commer18 cial revitalization credit agency which are ap19 propriate to local conditions,

20 ‘‘(B) which considers—

21 ‘‘(i) the degree to which a project con22 tributes to the implementation of a strate23 gic plan that is devised for an eligible com24 mercial revitalization area through a citi25 zen participation process,
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1 ‘‘(ii) the amount of any increase in

2 permanent, full-time employment by reason

3 of any project, and

4 ‘‘(iii) the active involvement of resi5 dents and nonprofit groups within the eli6 gible commercial revitalization area, and

7 ‘‘(C) which provides a procedure that the

8 agency (or its agent) will follow in monitoring

9 for compliance with this section.

10 ‘‘(g) TERMINATION.—This section shall not apply to

11 any building placed in service after December 31, 2000.’’

12 (c) CONFORMING AMENDMENTS.—

13 (1) Section 39(d) of the Internal Revenue Code

14 of 1986 is amended by adding at the end the follow15 ing new paragraph:

16 ‘‘(7) NO CARRYBACK OF SECTION 48A CREDIT

17 BEFORE ENACTMENT.—No portion of the unused

18 business credit for any taxable year which is attrib19 utable to any commercial revitalization credit deter20 mined under section 48A may be carried back to a

21 taxable year ending before the date of the enactment

22 of section 48A.’’

23 (2) Subparagraph (B) of section 48(a)(2) of

24 such Code is amended by inserting ‘‘or commercial
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1 revitalization’’ after ‘‘rehabilitation’’ each place it

2 appears in the text and heading thereof.

3 (3) Subparagraph (C) of section 49(a)(1) of

4 such Code is amended by striking ‘‘and’’ at the end

5 of clause (ii), by striking the period at the end of

6 clause (iii) and inserting ‘‘, and’’, and by adding at

7 the end the following new clause:

8 ‘‘(iv) the basis of any qualified revital9 ization building attributable to qualified re10 vitalization expenditures.’’

11 (4) Paragraph (2) of section 50(a) of such Code

12 is amended by inserting ‘‘or 48A(d)(2)’’ after ‘‘sec13 tion 47(d)’’ each place it appears.

14 (5) Subparagraph (B) of section 50(a)(2) of

15 such Code is amended by adding at the end the fol16 lowing new sentence: ‘‘A similar rule shall apply for

17 purposes of section 48A.’’

18 (6) Subparagraph (A) of section 50(b)(2) of

19 such Code is amended by inserting ‘‘or qualified re20 vitalization building (respectively)’’ after ‘‘qualified

21 rehabilitated building’’.

22 (7) Paragraph (2) of section 50(b) of such Code

23 is amended by striking ‘‘and’’ at the end of subpara24 graph (C), by striking the period at the end of sub-
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1 paragraph (D) and inserting ‘‘, and’’, and by adding

2 at the end the following new subparagraph:

3 ‘‘(E) a qualified revitalization building to

4 the extent of the portion of the basis which is

5 attributable to qualified revitalization expendi6 tures.’’

7 (8) Subparagraph (C) of section 50(b)(4) of

8 such Code is amended by inserting ‘‘or commercial

9 revitalization’’ after ‘‘rehabilitated’’ each place it ap10 pears in the text or heading thereof.

11 (9) Subparagraph (C) of section 469(i)(3) is

12 amended—

13 (A) by inserting ‘‘or section 48A’’ after

14 ‘‘section 42’’; and

15 (B) by striking ‘‘CREDIT’’ in the heading

16 and inserting ‘‘AND COMMERCIAL REVITALIZA17 TION CREDITS’’.

18 (d) EFFECTIVE DATE.—The amendments made by

19 this section shall apply to property placed in service after

20 the date of the enactment of this Act.
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1 Subtitle C—Brownfields

2 Redevelopment Act

3 SEC. 121. ENVIRONMENTAL REMEDIATION TAX CREDIT

4 FOR CONTAMINATED SITES IN

5 EMPOWERMENT ZONES.

6 (a) GENERAL RULE.—Part IV of subchapter A of

7 chapter 1 of the Internal Revenue Code of 1986 (relating

8 to credits allowable) is amended by adding at the end the

9 following new subpart:

10 ‘‘Subpart H—Environmental Remediation Credit for

11 Sites in Empowerment Zones

‘‘Sec. 54. Amount of environmental remediation credit.

‘‘Sec. 54A. Definitions and special rules.

12 ‘‘SEC. 54. AMOUNT OF ENVIRONMENTAL REMEDIATION

13 CREDIT.

14 ‘‘(a) GENERAL RULE.—For purposes of section 38,

15 the environmental remediation credit for empowerment

16 zones determined under this section is 50 percent of the

17 costs—

18 ‘‘(1) which are paid or incurred by the taxpayer

19 for environmental remediation with respect to any

20 qualified contaminated site which is owned by the

21 taxpayer, and

22 ‘‘(2) which are incurred by the taxpayer pursu23 ant to an environmental remediation plan for such

24 site which was approved by the Administrator of the
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1 Environmental Protection Agency or by the head of

2 any State or local government agency designated by

3 the Administrator to carry out the Administrator’s

4 functions under this subpart with respect to such

5 site.

6 ‘‘(b) REMEDIATION PLAN MUST BE COMPLETED.—

7 ‘‘(1) IN GENERAL.—Except as otherwise pro8 vided in paragraph (2)—

9 ‘‘(A) no environmental remediation credit

10 shall be determined under this section with re11 spect to any qualified contaminated site unless

12 the Administrator of the Environmental Protec13 tion Agency (or such Administrator’s designee

14 under subsection (a)(2)) certifies that the envi15 ronmental remediation plan for such site has

16 been completed, and

17 ‘‘(B) if such Administrator (or designee)

18 certifies that such plan has been completed,

19 such credit shall be taken into account under

20 subsection (a) ratably over the 5-taxable-year

21 period beginning with the taxable year in which

22 such plan was completed.

23 ‘‘(2) SPECIAL RULE WHERE EXTRAORDINARY

24 COST INCREASES.—If—
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1 ‘‘(A) the taxpayer determines that due to

2 unforeseen circumstances the cost of completing

3 the remediation plan for any qualified contami4 nated site exceeds 200 percent of the estimated

5 costs of completing such plan, and

6 ‘‘(B) the State or local official administer7 ing the remediation credit program agrees with

8 such determination,

9 the taxpayer may cease the implementation of such

10 plan and shall be entitled to an environmental reme11 diation credit with respect to costs incurred before

12 such cessation. Such credit shall be taken into ac13 count under subsection (a) ratably over the 5-tax14 able-year period beginning with the taxable year in

15 which such cessation occurs.

16 ‘‘(c) CERTAIN PARTIES NOT ELIGIBLE.—A taxpayer

17 shall not be eligible for any credit determined under this

18 section with respect to any qualified contaminated site if—

19 ‘‘(1) at any time on or before the date of the

20 enactment of this subpart, such taxpayer was the

21 owner or operator of any business on such site,

22 ‘‘(2) at any time before, on, or after such date

23 of enactment such taxpayer—

24 ‘‘(A) had (by contract, agreement, or oth25 erwise) arranged for the disposal or treatment
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1 of any hazardous materials at such site or ar2 ranged with a transporter for transport for dis3 posal or treatment of any hazardous materials

4 at such site, or

5 ‘‘(B) had accepted any hazardous mate6 rials for transport to such site, or

7 ‘‘(3) the taxpayer is related to any taxpayer re8 ferred to in paragraph (1) or (2).

9 The preceding sentence shall not apply to a taxpayer who

10 became described therein by reason of the acquisition of

11 the business or site through foreclosure (or the equivalent)

12 of a security interest held by the taxpayer or a related

13 party if the taxpayer undertakes to sell or otherwise dis14 pose of such business or site in a reasonably expeditious

15 manner on commercially reasonable terms.

16 ‘‘(d) QUALIFIED CONTAMINATED SITE.—For pur17 poses of this subpart, the term ‘qualified contaminated

18 site’ means any contaminated site if—

19 ‘‘(1) the contaminated site is located entirely

20 within an empowerment zone,

21 ‘‘(2) the condition of the contaminated site is

22 such that without participation in the environmental

23 remediation credit program redevelopment is un24 likely,
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1 ‘‘(3) the contaminated site has not been in pro2 ductive use for at least 1 year before participation

3 in the program,

4 ‘‘(4) there is a strong likelihood of redevelop5 ment of the site for industrial or commercial use

6 that will result in creation of jobs and expansion of

7 the tax base, and

8 ‘‘(5) environmental remediation and redevelop9 ment are likely to be completed within a reasonable

10 period of time.

11 ‘‘SEC. 54A. DEFINITIONS AND SPECIAL RULES.

12 ‘‘(a) CONTAMINATED SITE.—For purposes of this

13 subpart—

14 ‘‘(1) IN GENERAL.—The term ‘contaminated

15 site’ means any site if at least 1 of the following en16 vironmental conditions is present on such site:

17 ‘‘(A) A release or threatened release of any

18 hazardous, toxic, or dangerous substance.

19 ‘‘(B) Any storage tanks which contain any

20 hazardous, toxic, or dangerous substance.

21 ‘‘(C) Any illegal disposal of solid waste.

22 ‘‘(2) HAZARDOUS, TOXIC, OR DANGEROUS SUB23 STANCE.—Any substance, waste, or material shall be

24 treated as a hazardous, toxic, or dangerous sub25 stance if it is so treated under—
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1 ‘‘(A) the Comprehensive Environmental

2 Response, Compensation, and Liability Act (42

3 U.S.C. 9601 et seq.) as in effect on the date of

4 the enactment of this section, or

5 ‘‘(B) the Resource Conservation and Re6 covery Act (42 U.S.C. 6901 et seq.) as so in ef7 fect.

8 The following materials shall in any event be treated

9 as such a substance: petroleum or crude oil or any

10 derivative thereof, friable asbestos or any asbestos

11 containing material, polychlorinated biphenyls, and

12 lead paint.

13 ‘‘(b) ENVIRONMENTAL REMEDIATION.—For pur14 poses of this subpart, the term ‘environmental remedi15 ation’ means—

16 ‘‘(1) removal or remediation activity in accord17 ance with the plan approved under section 54(a)(2),

18 ‘‘(2) restoration of natural, historic or cultural

19 resources at the site, or the mitigation of unavoid20 able losses of such resources incurred in connection

21 with the remediation or response activity,

22 ‘‘(3) health assessments or health effects stud23 ies related to the site,

24 ‘‘(4) remediation of off-site contamination

25 caused by activity on the site (other than remedi-
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1 ation activities of a type not permitted for the site),

2 and

3 ‘‘(5) any other costs specified in the plan ap4 proved under section 54(a)(2), including demolition

5 of existing contaminated structures, site security,

6 permit fees necessary for remediation, and environ7 mental audits.

8 ‘‘(c) RELATED PERSON.—For purposes of this sub9 part, persons shall be treated as related to each other if

10 such persons are treated as a single employer under the

11 regulations prescribed under section 52(b) or such persons

12 bear a relationship to each other specified in section

13 267(b) or 707(b).’’

14 (b) CREDIT MADE PART OF GENERAL BUSINESS

15 CREDIT.—Subsection (b) of section 38 of such Code is

16 amended by striking ‘‘plus’’ at the end of paragraph (10),

17 by striking the period at the end of paragraph (11) and

18 inserting ‘‘, plus’’, and by adding at the end the following

19 new paragraph:

20 ‘‘(12) the environmental remediation credit for

21 empowerment zones under section 54(a).’’

22 (c) LIMITATION ON CARRYBACK.—Subsection (d) of

23 section 39 of such Code (as amended by section 115(c))

24 is amended by adding at the end the following new para25 graph:
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1 ‘‘(8) NO CARRYBACK OF ENVIRONMENTAL RE2 MEDIATION CREDIT BEFORE ENACTMENT.—No por3 tion of the unused business credit for any taxable

4 year which is attributable to the credit under section

5 54 may be carried back to a taxable year ending be6 fore the date of the enactment of section 54.’’

7 (d) DEDUCTION FOR UNUSED CREDIT.—Subsection

8 (c) of section 196 of such Code is amended by striking

9 ‘‘and’’ at the end of paragraph (6), by striking the period

10 at the end of paragraph (7) and inserting ‘‘, and’’, and

11 by adding at the end the following new paragraph:

12 ‘‘(8) the environmental remediation credit de13 termined under section 54.’’

14 (e) CLERICAL AMENDMENT.—The table of subparts

15 for part IV of subchapter A of chapter 1 of such Code

16 is amended by adding at the end the following new item:

‘‘Subpart H. Environmental remediation credit.’’

17 (f) EFFECTIVE DATE.—The amendments made by

18 this section shall apply to taxable years ending after the

19 date of the enactment of this Act.

20 SEC. 122. USE OF REDEVELOPMENT BONDS FOR ENVIRON21 MENTAL REMEDIATION IN EMPOWERMENT

22 ZONES.

23 (a) ENVIRONMENTAL REMEDIATION INCLUDED AS

24 REDEVELOPMENT PURPOSE.—Subparagraph (A) of sec25 tion 144(c)(3) of the Internal Revenue Code of 1986 (re-
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1 lating to redevelopment purposes) is amended by striking

2 ‘‘and’’ at the end of clause (iii), by striking the period

3 at the end of clause (iv) and inserting ‘‘, and’’, and by

4 adding at the end the following new clause:

5 ‘‘(v) the costs of environmental reme6 diation (as defined in section 54A(b)) with

7 respect to a qualified contaminated site (as

8 defined in section 54(d)) if such costs are

9 incurred pursuant to an environmental re10 mediation plan which was approved by the

11 Administrator of the Environmental Pro12 tection Agency or by the head of any State

13 or local government agency designated by

14 the Administrator to carry out the Admin15 istrator’s functions under this clause.’’

16 (b) CERTAIN REQUIREMENTS NOT TO APPLY TO

17 REDEVELOPMENT BONDS FOR ENVIRONMENTAL REME18 DIATION.—Subsection (c) of section 144 of such Code is

19 amended by adding at the end the following new para20 graph:

21 ‘‘(9) CERTAIN REQUIREMENTS NOT TO APPLY

22 TO REDEVELOPMENT BONDS FOR ENVIRONMENTAL

23 REMEDIATION IN EMPOWERMENT ZONES.—In the

24 case of any bond issued as part of an issue 95 per-
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1 cent or more of the proceeds of which are to finance

2 costs referred to in paragraph (3)(A)(v)—

3 ‘‘(A) paragraph (2)(A)(i) shall not apply,

4 ‘‘(B) paragraph (2)(A)(ii) shall not apply

5 to any issue issued by the governing body de6 scribed in paragraph (4)(A) with respect to the

7 area which includes the site,

8 ‘‘(C) the requirement of paragraph

9 (2)(B)(ii) shall be treated as met if—

10 ‘‘(i) the payment of the principal and

11 interest on such issue is secured by taxes

12 imposed by a governmental unit, or

13 ‘‘(ii) such issue is approved by the ap14 plicable elected representative (as defined

15 in section 147(f)(2)(E)) of the govern16 mental unit which issued such issue (or on

17 behalf of which such issue was issued),

18 ‘‘(D) subparagraphs (C) and (D) of para19 graph (2) shall not apply,

20 ‘‘(E) subparagraphs (C) and (D) of para21 graph (4) shall not apply, and

22 ‘‘(F) if the real property referred to in

23 clause (iii) of paragraph (3)(A) is 1 or more

24 dwelling units, such clause shall apply only if

25 the requirements of section 142(d) or 143 (as
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1 the case may be) are met with respect to such

2 units.’’

3 (c) PENALTY FOR FAILURE TO SATISFACTORILY

4 COMPLETE REMEDIATION PLAN.—Subsection (b) of sec5 tion 150 of such Code is amended by adding at the end

6 the following new paragraph:

7 ‘‘(7) QUALIFIED CONTAMINATED SITE REMEDI8 ATION BONDS.—In the case of financing provided for

9 costs described in section 144(c)(3)(A)(v), no deduc10 tion shall be allowed under this chapter for interest

11 on such financing during any period during which

12 there is a determination by the Administrator of the

13 Environmental Protection Agency (or by the head of

14 any State or local government agency designated by

15 the Administrator to carry out the Administrator’s

16 functions under this paragraph) that the remedi17 ation plan under which such costs were incurred was

18 not satisfactorily completed.’’

19 (d) EFFECTIVE DATE.—The amendments made by

20 this section shall apply to bonds issued after the date of

21 the enactment of this Act.
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1 TITLE II—ASSISTANCE FOR IN2 FRASTRUCTURE IMPROVE3 MENTS AND DEVELOPMENT

4 SEC. 201. LOAN GUARANTEES.

5 (a) AUTHORITY.—The Secretary of Housing and

6 Urban Development may guarantee and make commit7 ments to guarantee eligible debt instruments. Any such

8 guarantee or commitment shall be subject to such terms

9 and conditions as the Secretary may prescribe.

10 (b) ELIGIBLE DEBT INSTRUMENTS.—For purposes

11 of this section, the term ‘‘eligible debt instrument’’ means

12 a note or other obligation that—

13 (1) is issued by an eligible unit of general local

14 government (or a public agency designated by such

15 a unit);

16 (2) is issued for the purpose of financing any

17 infrastructure activities that are—

18 (A) to be carried out within an

19 empowerment zone or enterprise community

20 which is located (in whole or in part) within the

21 unit of general local government; and

22 (B) consistent with the strategic plan for

23 the empowerment zone or enterprise commu24 nity; and
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1 (3) is in such form and denomination, has such

2 maturity, and is subject to such other conditions as

3 the Secretary shall prescribe.

4 (c) SECURITY AND REPAYMENT.—

5 (1) REQUIREMENTS ON ISSUER.—To ensure the

6 repayment of eligible debt instruments guaranteed

7 under this section and as a condition for receiving

8 such guarantees, the Secretary shall require the unit

9 of local government issuing the debt instrument to—

10 (A) enter into a contract, in a form accept11 able to the Secretary, for repayment of the debt

12 instrument guaranteed; and

13 (B) furnish, at the discretion of the Sec14 retary, such other security as may be deemed

15 appropriate by the Secretary in making such

16 guarantees.

17 (2) FULL FAITH AND CREDIT.—The full faith

18 and credit of the United States is hereby pledged to

19 the payment of all guarantees made under this sec20 tion. Any such guarantee made by the Secretary

21 shall be conclusive evidence of the eligibility of the

22 debt instrument for such guarantee with respect to

23 principal and interest, and the validity of any such

24 guarantee so made shall be incontestable in the
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1 hands of a holder of the guaranteed debt instru2 ments.

3 (d) LIMITATIONS ON AMOUNT OF GUARANTEES.—

4 (1) AGGREGATE FISCAL YEAR LIMITATION.—

5 Notwithstanding any other provision of law, to the

6 extent approved or provided in appropriation Acts,

7 the Secretary may enter into commitments under

8 this section to guarantee eligible debt instruments

9 with an aggregate principal amount not exceeding

10 $50,000,000.

11 (2) LIMITATIONS ON EMPOWERMENT ZONES

12 AND ENTERPRISE COMMUNITIES.—The aggregate

13 amount of the eligible debt instruments for financing

14 infrastructure activities in a single empowerment

15 zone or enterprise community that are guaranteed

16 under this section may not exceed, in any single fis17 cal year—

18 (A) $3,000,000, with respect to any

19 empowerment zone; and

20 (B) $1,000,000, with respect to any enter21 prise community.

22 (e) ELIGIBILITY OF ISSUERS.—The Secretary shall

23 establish criteria for use in determining whether to guar24 antee the eligible debt instruments of an eligible unit of
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1 general local government, which shall include consider2 ation of the following factors:

3 (1) The extent to which the activities to be as4 sisted with the proceeds of the eligible debt instru5 ments guaranteed will benefit residents of the

6 empowerment zone or enterprise community in7 volved.

8 (2) The extent to which the empowerment zone

9 or enterprise community involved is located within

10 the area of jurisdiction of the eligible unit of general

11 local government that is the issuer of the eligible

12 debt instruments.

13 (3) The extent of cooperation between the eligi14 ble unit of general local government that is the is15 suer and any other governments with jurisdiction

16 over the empowerment zone or enterprise commu17 nity.

18 (4) The extent of private and community par19 ticipation in the activities to be assisted with the

20 proceeds of the eligible debt instruments guaranteed.

21 (5) The extent to which the activities to be as22 sisted with the eligible debt instruments guaranteed

23 will be financed with amounts other than such pro24 ceeds.
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1 (6) Such other criteria as the Secretary may

2 prescribe.

3 (f) AUTHORIZATION OF APPROPRIATIONS FOR CRED4 IT SUBSIDY.—There are authorized to be appropriated to

5 cover the costs (as such term is defined in section 502

6 of the Congressional Budget Act of 1974) of guarantees

7 under this section, such sums as may be necessary for fis8 cal year 1997. Any amounts appropriated pursuant to this

9 subsection shall remain available until expended.

10 (g) TERMINATION.—The Secretary may not guaran11 tee any eligible debt instruments under this subsection

12 after September 30, 2001, except pursuant to a guarantee

13 issued on or before such date.

14 SEC. 202. REVOLVING FUND FOR LOANS.

15 (a) IN GENERAL.—The Secretary shall establish and

16 administer a revolving loan fund under this section and

17 may use amounts in the fund to make loans to eligible

18 units of general local government to carry out infrastruc19 ture activities.

20 (b) USE OF AMOUNTS.—Amounts in the revolving

21 loan fund established under this section shall be available,

22 to the extent provided in appropriation Acts, only for—

23 (1) loans to eligible units of general local gov24 ernment to carry out infrastructure activities that

25 are—
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1 (A) to be carried out within the

2 empowerment zone or enterprise community

3 which is located (in whole or in part) within the

4 unit of general local government; and

5 (B) consistent with the strategic plan for

6 the empowerment zone or enterprise commu7 nity; and

8 (2) reasonable administrative costs of the fund.

9 (c) CREDITS.—The loan fund established under this

10 section shall be credited with—

11 (1) any amounts appropriated for deposit in the

12 fund;

13 (2) any repayment of principal and interest

14 under a loan made from the fund;

15 (3) any amounts resulting from claims and col16 lections under a loan made from the fund;

17 (4) any other amounts dedicated to the fund.

18 (d) LOAN AMOUNT LIMITATION.—The aggregate

19 amount of the loans made under this section for infra20 structure activities in any single empowerment zone or en21 terprise community may not exceed, in any single fiscal

22 year—

23 (1) $3,000,000, with respect to any

24 empowerment zone; and
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1 (2) $1,000,000, with respect to any enterprise

2 community.

3 (e) ELIGIBILITY OF BORROWERS.—The Secretary

4 shall establish criteria for use in determining whether to

5 make a loan from the fund established under this section

6 to an applicant eligible unit of general local government,

7 which shall include consideration of the following factors:

8 (1) The extent to which the activities to be as9 sisted with the loan amounts are consistent with the

10 strategic plan for empowerment zone or enterprise

11 community.

12 (2) The extent to which the activities to be as13 sisted with the loan amounts will benefit residents of

14 the empowerment zone or enterprise community in15 volved.

16 (3) The extent to which the empowerment zone

17 or enterprise community involved is located within

18 the area of jurisdiction of the applicant unit of gen19 eral local government.

20 (4) The extent of cooperation between the ap21 plicant unit of general local government and any

22 other governments with jurisdiction over the

23 empowerment zone or enterprise community.
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1 (5) The extent of private and community par2 ticipation in the activities to be assisted with the

3 loan amounts.

4 (6) The extent to which the activities to be as5 sisted with the loan amounts will be financed with

6 amounts other than such loan proceeds.

7 (7) Such other criteria as the Secretary may

8 prescribe.

9 (f) AUTHORIZATION OF APPROPRIATIONS.—There is

10 authorized to be appropriated for deposit in the loan fund

11 established under this section $50,000,000 for fiscal year

12 1997.

13 SEC. 203. GRANTS TO UNITS OF GENERAL LOCAL GOVERN14 MENT.

15 (a) IN GENERAL.—The Secretary may make grants

16 under this section to eligible units of general local govern17 ment to carry out infrastructure activities.

18 (b) GRANT AMOUNT LIMITATION.—The aggregate

19 amount of the grants made under this section for infra20 structure activities in any single empowerment zone or en21 terprise community may not exceed, in any single fiscal

22 year—

23 (1) $3,000,000, with respect to any

24 empowerment zone; and
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1 (2) $1,000,000, with respect to any enterprise

2 community.

3 (c) USE OF GRANT AMOUNTS.—Amounts from a

4 grant under this section may be used only for carrying

5 out infrastructure activities that are—

6 (1) to be carried out within the empowerment

7 zone or enterprise community which is located (in

8 whole or in part) within the unit of general local

9 government to which the grant is made; and

10 (2) consistent with the strategic plan for the

11 empowerment zone or enterprise community.

12 Such infrastructure activities may be carried out directly

13 by the grantee or by subgrantees.

14 (d) SELECTION OF GRANTEES.—The Secretary shall

15 select eligible units of general local government to receive

16 grants under this section from among the units that apply

17 for grants. The Secretary shall establish requirements and

18 procedures for applications under this section. Selection

19 shall be made under a competition based on the following

20 criteria:

21 (1) The extent to which the activities to be as22 sisted with grant amounts are consistent with the

23 strategic plan for empowerment zone or enterprise

24 community.
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1 (2) The extent to which the activities to be as2 sisted with grant amounts will benefit residents of

3 the empowerment zone or enterprise community in4 volved.

5 (3) The extent to which the empowerment zone

6 or enterprise community involved is located within

7 the area of jurisdiction of the applicant unit of gen8 eral local government.

9 (4) The extent of cooperation between the ap10 plicant unit of general local government and any

11 other governments with jurisdiction over the

12 empowerment zone or enterprise community.

13 (5) The extent of private and community par14 ticipation in the activities to be assisted with the

15 loan amounts.

16 (6) The extent to which the activities to be as17 sisted with grant amounts will be assisted with

18 amounts other than such grant amounts.

19 (7) Such other criteria as the Secretary may

20 prescribe.

21 (e) AUTHORIZATION OF APPROPRIATIONS.—There is

22 authorized to be appropriated for grants under this section

23 $10,000,000 for each of fiscal years 1997, 1998, 1999,

24 2000, and 2001. Any amounts appropriated pursuant to

25 this subsection shall remain available until expended.
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1 SEC. 204. ELIGIBLE UNITS OF GENERAL LOCAL GOVERN2 MENT.

3 For purposes of this title, the term ‘‘eligible unit of

4 general local government’’ means a unit of general local

5 government that has an area of jurisdiction within which

6 is located all or part of an empowerment zone or enter7 prise community for which the designation referred to in

8 paragraph (1) or (2) of section 206 is in effect.

9 SEC. 205. INFRASTRUCTURE ACTIVITIES.

10 For purposes of this title, the term ‘‘infrastructure

11 activities’’ means the provision, improvement, or develop12 ment of—

13 (1) roads, streets, tunnels, bridges, or side14 walks;

15 (2) convention or trade show facilities;

16 (3) airports, commercial ports, docks, or

17 wharves, mass commuting facilities, parking facili18 ties, or storage or training facilities directly related

19 to any other facility under this paragraph;

20 (4) intermodal transportation facilities;

21 (5) sewage or solid waste disposal facilities or

22 facilities for the local furnishing of electric energy or

23 gas;

24 (6) air or water pollution control facilities;

25 (7) facilities for the furnishing of water for any

26 purpose if—
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1 (A) the water is or will be made available

2 to members of the general public; and

3 (B)(i) the facilities are operated by a gov4 ernmental unit, or (ii) the rates for the furnish5 ing or sale of water have been established or

6 approved by a State or unit of general local

7 government, by an agency or instrumentality of

8 the United States, or by a public service or

9 public utility commission or other similar body

10 of any State or unit of general local govern11 ment;

12 (8) hydroelectric generating facilities;

13 (9) mass commuting vehicles or systems;

14 (10) local district heating or cooling facilities;

15 (11) projects for residential rental property, if

16 at all times during the 10-year period beginning

17 upon the initial occupancy of the project (as the Sec18 retary shall determine) 20 percent or more of the

19 dwelling units in each of the projects are available

20 for occupancy only by low-income families (as such

21 term is defined in section 3 of the United States

22 Housing Act of 1937);

23 (12) land as the site for an industrial park

24 (which includes the acquisition of land, the provision

25 of water, sewage, drainage, and similar facilities,
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1 and transportation, power, and communication facili2 ties incidental to use of the site as an industrial

3 park, but does not include the provision of struc4 tures or buildings); or

5 (13) computer or automation technology for—

6 (A) the establishment of local public- or

7 educational-sector wide area networks (includ8 ing providing public access sites and systems in9 tegration); or

10 (B) federally designated national informa11 tion highway facilities.

12 SEC. 206. DEFINITIONS.

13 For purposes of this title, the following definitions

14 shall apply:

15 (1) EMPOWERMENT ZONE.—The term

16 ‘‘empowerment zone’’ means an area that has been

17 designated as an empowerment zone under part I of

18 subchapter U of chapter 1 of the Internal Revenue

19 Code of 1986.

20 (2) ENTERPRISE COMMUNITY.—The term ‘‘en21 terprise community’’ means an area that has been

22 designated as an enterprise community under part I

23 of subchapter U of chapter 1 of the Internal Reve24 nue Code of 1986.
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1 (3) SECRETARY.—The term ‘‘Secretary’’ means

2 the Secretary of Housing and Urban Development.

3 (4) STRATEGIC PLAN.—The term ‘‘strategic

4 plan’’ means, with respect to an empowerment zone

5 or enterprise community, the plan contained in the

6 application for designation of the area as such a

7 zone or community under part I of subchapter U of

8 chapter 1 of the Internal Revenue Code of 1986.

9 (5) UNIT OF GENERAL LOCAL GOVERNMENT.—

10 The term ‘‘unit of general local government’’

11 means—

12 (A) any county, city, town, township, par13 ish, village, or other general purpose political

14 subdivision of a State; and

15 (B) any combination of political subdivi16 sions described in subparagraph (A) recognized

17 by the Secretary.

18 SEC. 207. REGULATIONS.

19 The Secretary may issue any regulations necessary

20 to carry out this title.
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1 TITLE III—ADDITIONAL BENE2 FITS FOR EMPOWERMENT

3 ZONES AND ENTERPRISE

4 COMMUNITIES

5 SEC. 301. EDUCATION GRANTS.

6 (a) SHORT TITLE.—This section may be cited as the

7 ‘‘Give Students the Power to Work Program Act’’.

8 (b) PROGRAM AUTHORIZED.—The Secretary of Edu9 cation is authorized to provide grants to local educational

10 agencies located in empowerment zones to provide stu11 dents in such areas with the employment skills and tech12 nologies necessary to sustain or improve businesses and

13 industries located in such zones.

14 (c) AUTHORIZATION.— There are authorized to be

15 appropriated $30,000,000 for fiscal year 1997 to carry

16 out this section.

17 SEC. 302. MINIMUM ALLOCATION OF FOREIGN ASSISTANCE

18 FOR PURCHASE OF CERTAIN UNITED STATES

19 GOODS.

20 (a) ALLOCATION OF ASSISTANCE.—Notwithstanding

21 any other provision of law, effective beginning with fiscal

22 year 1997, not less than 15 percent of United States as23 sistance provided in a fiscal year shall be provided in the

24 form of credits which may only be used for the purchase

25 of United States goods produced, manufactured, or assem-
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1 bled in empowerment zones, enterprise communities, or

2 enterprise zones within the United States.

3 (b) UNITED STATES ASSISTANCE.—As used in this

4 section, the term ‘‘United States assistance’’ means—

5 (1) any assistance under the Foreign Assistance

6 Act of 1961;

7 (2) sales, or financing of sales under the Arms

8 Export Control Act; and

9 (3) assistance and other activities under the

10 Support for East European Democracy (SEED) Act

11 of 1989 (Public Law 101–179).

12 (c) DEFINITIONS.—As used in this section:

13 (1) The term ‘‘empowerment zone’’ means a

14 zone designated as an empowerment zone pursuant

15 to subchapter U of chapter 1 of the Internal Reve16 nue Code of 1986 (26 U.S.C. 1391 et seq.).

17 (2) The term ‘‘enterprise community’’ means a

18 community designated as an enterprise community

19 pursuant to subchapter U of chapter 1 of the Inter20 nal Revenue Code of 1986 (26 U.S.C. 1391 et seq.).
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1 SEC. 303. REQUIREMENT FOR FEDERAL GOVERNMENT TO

2 PROCURE 15 PERCENT OF GOODS AND SERV3 ICES FROM BUSINESSES LOCATED IN

4 EMPOWERMENT ZONES AND ENTERPRISE

5 COMMUNITIES.

6 (a) CIVILIAN AGENCY ACQUISITIONS.—(1) Title III

7 of the Federal Property and Administrative Services Act

8 of 1949 (41 U.S.C. 251 et seq.) is amended by adding

9 at the end the following new section:

10 ‘‘SEC. 317. REQUIREMENT TO PROCURE GOODS AND SERV11 ICES FROM ENTITIES LOCATED IN

12 EMPOWERMENT ZONES AND ENTERPRISE

13 COMMUNITIES.

14 ‘‘(a) REQUIREMENT.—At least 15 percent of the

15 amount obligated in a fiscal year by an executive agency

16 for contracts for the procurement of goods and services

17 shall be obligated for contracts to be carried out by entities

18 located in empowerment zones or enterprise communities.

19 ‘‘(b) LIMITATION.—The requirement of subsection

20 (a) shall not apply to the extent that the goods or services

21 to be procured—

22 ‘‘(1) are not reasonably available within a rea23 sonable period of time from an entity located in an

24 empowerment zone or enterprise community;

25 ‘‘(2) are so available, but fail to meet the per26 formance standards set forth in the applicable speci-
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1 fications or fail to meet the reasonable performance

2 standards of the procuring agency; or

3 ‘‘(3) are so available, but at an unreasonable

4 price.

5 ‘‘(c) DEFINITION.—For purposes of this section, the

6 terms ‘empowerment zone’ and ‘enterprise community’

7 mean such a zone or community designated under section

8 1391 of the Internal Revenue Code of 1986.’’.

9 (2) The table of contents for such title is amended

10 by adding after the item relating to section 316 the follow11 ing new item:

‘‘Sec. 317. Requirement to procure goods and services from entities located in

empowerment zones and enterprise communities.’’.

12 (b) ARMED SERVICES ACQUISITIONS.—(1) Chapter

13 137 of title 10, United States Code, is amended by adding

14 at the end the following new section:

15 ‘‘§ 2332. Requirement to procure goods and services

16 from entities located in empowerment

17 zones and enterprise communities.

18 ‘‘(a) REQUIREMENT.—At least 15 percent of the

19 amount obligated in a fiscal year by an agency listed in

20 section 2303 for contracts for the procurement of goods

21 and services shall be obligated for contracts to be carried

22 out by entities located in empowerment zones or enterprise

23 communities.
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1 ‘‘(b) LIMITATION.—The requirement of subsection

2 (a) shall not apply to the extent that the goods or services

3 to be procured—

4 ‘‘(1) are not reasonably available within a rea5 sonable period of time from an entity located in an

6 empowerment zone or enterprise community;

7 ‘‘(2) are so available, but fail to meet the per8 formance standards set forth in the applicable speci9 fications or fail to meet the reasonable performance

10 standards of the procuring agency; or

11 ‘‘(3) are so available, but at an unreasonable

12 price.

13 ‘‘(c) DEFINITION.—For purposes of this section, the

14 terms ‘empowerment zone’ and ‘enterprise community’

15 mean such a zone or community designated under section

16 1391 of the Internal Revenue Code of 1986.’’.

17 (2) The table of sections at the beginning of such

18 chapter is amended by adding at the end the following

19 new item:

‘‘2332. Requirement to procure goods and services from entities located in

empowerment zones and enterprise communities.’’.

20 (c) EFFECTIVE DATE.—Section 317 of the Federal

21 Property and Administrative Services Act of 1949 and

22 section 2332 of title 10, United States Code, as added by

23 subsections (a) and (b), respectively, shall take effect on

24 October 1, 1996.
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1 SEC. 304. REQUIREMENT FOR FEDERAL GOVERNMENT TO

2 PROCURE RECYCLED MATERIALS FROM EN3 TITIES LOCATED IN EMPOWERMENT ZONES.

4 (a) REQUIREMENT.—Section 6002(c)(1) of the Solid

5 Waste Disposal Act (42 U.S.C. 6962(c)(1)) is amended

6 by inserting after the first sentence the following: ‘‘Such

7 items shall be procured from entities located in

8 empowerment zones, as designated under section 1391 of

9 the Internal Revenue Code of 1986.’’.

10 (b) EFFECTIVE DATE.—The amendment made by

11 subsection (a) shall take effect on October 1, 1996.

12 SEC. 305. GET EMPOWERMENT ZONES MOVING PROGRAM.

13 (a) IN GENERAL.—The Secretary of Transportation

14 may make grants to a State or local government in which

15 an empowerment zone is located to finance innovative pro16 grams for meeting the transportation needs of the

17 empowerment zone.

18 (b) APPLICATIONS.—In order to be eligible to receive

19 a grant under this section, a State or local government

20 shall submit to the Secretary an application that is in such

21 form and contains such information as the Secretary may

22 require.

23 (c) USE OF GRANTS.—Amounts from grants made

24 under this section may be used to carry out innovative

25 transportation programs in an empowerment zone for any

26 of the following purposes:
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1 (1) Leasing and operating special transpor2 tation vehicles.

3 (2) Enhancing mobility in and around the

4 empowerment zone.

5 (3) Improving public safety in the

6 empowerment zone.

7 (4) Other purposes designed to meet the trans8 portation needs of the empowerment zone, as ap9 proved by the Secretary.

10 (d) EMPOWERMENT ZONE DEFINED.—In this sec11 tion, the term ‘‘empowerment zone’’ means a zone des12 ignated under section 1391 of the Internal Revenue Code

13 of 1986.

14 (e) AUTHORIZATION OF APPROPRIATIONS.—There is

15 authorized to be appropriated to carry out this section

16 $27,000,000 in the aggregate for fiscal years 1997

17 through 2001. Such sums shall remain available until ex18 pended.
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1 TITLE IV—REGULATORY

2 FLEXIBILITY

3 SEC. 401. DEFINITION OF SMALL ENTITIES IN

4 EMPOWERMENT ZONES AND ENTERPRISE

5 COMMUNITIES FOR ANALYSIS OF REGU6 LATORY FUNCTIONS.

7 Section 601 of title 5, United States Code, is amend8 ed—

9 (1) by striking ‘‘and’’ at the end of paragraph

10 (5); and

11 (2) by striking paragraph (6) and inserting the

12 following:

13 ‘‘(6) the term ‘small entity’ means—

14 ‘‘(A) a small business, small organization,

15 or small governmental jurisdiction defined in

16 paragraphs (3), (4), and (5) of this section; and

17 ‘‘(B)(i) any enterprise zone business (as

18 defined by section 1394(b)(3) of the Internal

19 Revenue Code of 1986);

20 ‘‘(ii) any unit of government that nomi21 nated an area which the appropriate Secretary

22 designates as an empowerment zone or enter23 prise community (within the meaning of section

24 1391 of the Internal Revenue Code of 1986)

25 that has a rule pertaining to the carrying out
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1 of any project, activity, or undertaking within

2 such zone or community; and

3 ‘‘(iii) any not-for-profit enterprise carrying

4 out a significant portion of its activities within

5 such a zone or community.

6 For purposes of subparagraph (B)(ii), the term ‘ap7 propriate Secretary’ has the meaning given such

8 term by section 1393(a)(1) of the Internal Revenue

9 Code of 1986.’’

10 SEC. 402. WAIVER OR MODIFICATION OF AGENCY RULES IN

11 EMPOWERMENT ZONES AND ENTERPRISE

12 COMMUNITIES.

13 (a) IN GENERAL.—Chapter 6 of title 5, United

14 States Code, is amended by adding after section 612 the

15 following new section:

16 ‘‘§ 613. Waiver or modification of agency rules in

17 empowerment zones and enterprise com18 munities

19 ‘‘(a) Upon the written request of any government

20 which nominated an area that the appropriate Secretary

21 has designated as an empowerment zone or enterprise

22 community under section 1391 of the Internal Revenue

23 Code of 1986, an agency is authorized, in order to further

24 the job creation, community development, or economic re25 vitalization objectives with respect to such zone or commu-
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1 nity, to waive or modify all or part of any rule which such

2 agency has authority to promulgate, as such rule pertains

3 to the carrying out of projects, activities, or undertakings

4 within such zone or community.

5 ‘‘(b) Nothing in this section shall authorize an agency

6 to waive or modify any rule adopted to carry out a statute

7 or Executive order which prohibits, or the purpose of

8 which is to protect persons against, discrimination on the

9 basis of race, color, religion, sex, familial status, national

10 origin, age, or handicap.

11 ‘‘(c) A request under subsection (a) shall specify the

12 rule or rules to be waived or modified and the change pro13 posed, and shall briefly describe why the change would

14 promote the achievement of the job creation, community

15 development, or economic revitalization objectives of the

16 empowerment zone or enterprise community. If such a re17 quest is made to any agency other than the Department

18 of Housing and Urban Development or the Department

19 of Agriculture, the requesting government shall send a

20 copy of the request to the Secretary of Housing and Urban

21 Development or to the Secretary of Agriculture, whichever

22 is appropriate, at the time the request is made.

23 ‘‘(d) Any petition for a modification or waiver shall—

24 (i) identify the requirements for which the

25 modification or waiver is sought;
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1 ‘‘(ii) identify the existing or proposed business

2 or type of business to which the modification or

3 waiver would pertain;

4 ‘‘(iii) demonstrate that the public interest which

5 the proposed change would serve in furthering such

6 job creation, community development, or economic

7 revitalization outweighs the public interest which

8 continuation of the rule unchanged would serve;

9 ‘‘(iv) demonstrate the extent to which the pro10 posed change is likely to further job creation, com11 munity development, or economic revitalization with12 in the empowerment zone or enterprise community

13 against the effect the change is likely to have on the

14 underlying purposes of applicable statutes in the ge15 ographic area which would be affected by the

16 change; and

17 ‘‘(v) demonstrate that the waiver or modifica18 tion is necessary because the existing rule impedes

19 the implementation of an existing or proposed busi20 ness or type of business that furthers job creation,

21 community development, or economic revitalization.

22 ‘‘(e) The agency may approve, in its discretion, a pe23 tition upon determining that the petition meets the above24 stated criteria. The agency shall not approve any request
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1 to waive or modify a rule if that waiver or modification

2 would—

3 ‘‘(1) violate a statutory requirement (including

4 any requirements of the Fair Labor Standards Act

5 of 1938 (52 Stat. 1060; 29 U.S.C. 201 et seq.)); or

6 ‘‘(2) be likely to present a significant risk to the

7 public health, including environmental or occupa8 tional health or safety or environmental pollution.

9 ‘‘(f) A modified rule shall be enforceable as if it were

10 the issuance of an amendment to the rule being modified

11 or waived.

12 ‘‘(g) If a request is disapproved, the agency shall in13 form all the requesting governments, and the appropriate

14 Secretary (as defined in section 1393(a)(1) of the Internal

15 Revenue Code of 1986), in writing of the reasons therefor

16 and shall, to the maximum extent possible, work with such

17 governments to develop an alternative, consistent with the

18 standards contained in subsection (d).

19 ‘‘(h) No later than the date on which the petitioner

20 submits the petition to the agency, the petitioner shall in21 form the public of the submission of such petition (includ22 ing a brief description of the petition) through publication

23 of a notice in newspapers of general circulation in the area

24 in which the facility is located. The agency may authorize

25 or require petitioners to use additional or alternative
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1 means of informing the public of the submission of such

2 petitions. If the agency proposes to grant the petitions,

3 the agency shall provide public notice and opportunity to

4 comment. The agency shall publish a notice in the Federal

5 Register stating any waiver or modification of a rule under

6 this section, the time such waiver or modification takes

7 effect and its duration, and the scope of the applicability

8 of such waiver or modification, consistent with Adminis9 trative Procedure Act requirements.

10 ‘‘(i) In the event that an agency proposes to amend

11 a rule for which a waiver or modification under this sec12 tion is in effect, the agency shall not change the waiver

13 or modification to impose additional requirements unless

14 it determines, consistent with standards contained in sub15 section (d), that such action is necessary. Such determina16 tions shall be published with the proposal to amend such

17 rule.

18 ‘‘(j) No waiver or modification of a rule under this

19 section shall remain in effect with respect to an

20 empowerment zone or enterprise community after the zone

21 or community designation has expired or has been re22 voked.

23 ‘‘(k) For purposes of this section, the term ‘rule’

24 means—
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1 ‘‘(1) any rule as defined in section 551(4) of

2 this title, or

3 ‘‘(2) any rulemaking conducted on the record

4 after opportunity for an agency hearing pursuant to

5 sections 556 and 557 of this title.’’

6 (b) CLERICAL AMENDMENT.—The analysis for chap7 ter 6 of title 5, United States Code, is amended by insert8 ing after the item relating to section 612, the following

9 new item:

‘‘613. Waiver or modification of agency rules in empowerment zones and enterprise communities.’’

10 (c) CONFORMING AMENDMENTS.—

11 (1) Section 601(2) of such title 5 is amended

12 by inserting ‘‘(except for purposes of section 613)’’

13 before ‘‘means’’.

14 (2) Section 612 of such title 5 is amended—

15 (A) in subsection (a), by inserting ‘‘(except

16 section 613)’’ after ‘‘chapter’’; and

17 (B) in subsection (b), by inserting ‘‘as de18 fined in section 601(2)’’ before the period at

19 the end of the first sentence.

Æ