I 

108TH CONGRESS 

1ST SESSION H. R. 302

To amend the Internal Revenue Code of 1986 to provide tax incentives 

and job training grants for communities affected by the migration of 

businesses and jobs to Canada or Mexico as a result of the North 

American Free Trade Agreement. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 8, 2003

Mr. MCINTYRE introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, 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 of 1986 to provide 

tax incentives and job training grants for communities 

affected by the migration of businesses and jobs to Canada or Mexico as a result of the North American Free 

Trade Agreement.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘NAFTA-Impacted 

5 Community Relief Act’’. 
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1 SEC. 2. DESIGNATION OF AND TAX INCENTIVES FOR 

2 NAFTA-IMPACTED COMMUNITIES. 

3 (a) IN GENERAL.—Chapter 1 of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following new subchapter: 

6 ‘‘Subchapter Z—NAFTA-Impacted 

7 Communities

‘‘Sec. 1400M. Designation of NAFTA-impacted communities. 

‘‘Sec. 1400N. NAFTA-impacted community employment credit. 

‘‘Sec. 1400O. Increase in expensing under section 179. 

‘‘Sec. 1400P. NAFTA-impacted community business defined.

8 ‘‘SEC. 1400M. DESIGNATION OF NAFTA-IMPACTED COMMU9 NITIES. 

10 ‘‘(a) DESIGNATION.—

11 ‘‘(1) NAFTA-IMPACTED COMMUNITY.—For 

12 purposes of this title, the term ‘NAFTA-impacted 

13 community’ means any area—

14 ‘‘(A) which is nominated by one or more 

15 local governments and the State or States in 

16 which it is located for designation as a commu17 nity impacted by the North American Free 

18 Trade Agreement (hereinafter in this section re19 ferred to as a ‘nominated area’), and 

20 ‘‘(B) which the Secretary of Commerce 

21 designates as a NAFTA-impacted community, 

22 after consultation with—
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1 ‘‘(i) in the case of an area in a rural 

2 area, the Secretary of Agriculture; 

3 ‘‘(ii) in the case of an area in an 

4 urban area, the Secretary of Housing and 

5 Urban Development; and 

6 ‘‘(iii) in the case of an area on an In7 dian reservation, the Secretary of the Inte8 rior. 

9 ‘‘(2) NUMBER OF DESIGNATIONS.—The Sec10 retary of Commerce may designate not more than 

11 35 nominated areas as NAFTA-impacted commu12 nities. 

13 ‘‘(3) AREAS DESIGNATED BASED ON DEGREE

14 OF LOSS OF JOBS RESULTING FROM NAFTA, ETC.—

15 Except as otherwise provided in this section, the 

16 nominated areas designated as NAFTA-impacted 

17 communities under this subsection shall be those 

18 nominated areas with the highest average ranking 

19 with respect to the criteria described in subsection 

20 (c)(3). For purposes of the preceding sentence, an 

21 area shall be ranked within each such criterion on 

22 the basis of the amount by which the area exceeds 

23 such criterion, with the area which exceeds such cri24 terion by the greatest amount given the highest 

25 ranking. 
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1 ‘‘(4) LIMITATION ON DESIGNATIONS.—

2 ‘‘(A) PUBLICATION OF REGULATIONS.—

3 The Secretary of Commerce shall prescribe by 

4 regulation no later than 4 months after the 

5 date of the enactment of this section, after con6 sultation with the officials described in para7 graph (1)(B)—

8 ‘‘(i) the procedures for nominating an 

9 area under paragraph (1)(A), 

10 ‘‘(ii) the parameters relating to the 

11 size and population characteristics of a 

12 NAFTA-impacted community, and 

13 ‘‘(iii) the manner in which nominated 

14 areas will be evaluated based on the cri15 teria specified in subsection (c). 

16 ‘‘(B) PROCEDURAL RULES.—The Secretary 

17 of Commerce shall not make any designation of 

18 a nominated area as a NAFTA-impacted com19 munity under paragraph (2) unless—

20 ‘‘(i) a nomination regarding such area 

21 is submitted in such a manner and in such 

22 form, and contains such information, as 

23 the Secretary of Commerce shall by regula24 tion prescribe, and
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1 ‘‘(ii) the Secretary of Commerce de2 termines that any information furnished is 

3 reasonably accurate. 

4 ‘‘(5) NOMINATION PROCESS FOR INDIAN RES5 ERVATIONS.—For purposes of this subchapter, in 

6 the case of a nominated area on an Indian reserva7 tion, the reservation governing body (as determined 

8 by the Secretary of the Interior) shall be treated as 

9 being both the State and local governments with re10 spect to such area. 

11 ‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EF12 FECT.—

13 ‘‘(1) IN GENERAL.—Any designation of an area 

14 as a NAFTA-impacted community shall remain in 

15 effect during the period beginning on the date of the 

16 designation and ending on the earliest of—

17 ‘‘(A) December 31, 2010, 

18 ‘‘(B) the termination date designated by 

19 the State and local governments in their nomi20 nation, or 

21 ‘‘(C) the date the Secretary of Commerce 

22 revokes such designation. 

23 ‘‘(2) REVOCATION OF DESIGNATION.—The Sec24 retary of Commerce may revoke the designation 

25 under this section of an area if the Secretary deter-
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1 mines that the loss of jobs and other effects of 

2 NAFTA on the area have been substantially allevi3 ated. Such determination shall include, at a min4 imum, a finding that the unemployment rate in the 

5 area is equal to or lower than the national unem6 ployment rate, and a finding that new businesses are 

7 being attracted to the area. 

8 ‘‘(c) AREA AND ELIGIBILITY REQUIREMENTS.—

9 ‘‘(1) IN GENERAL.—The Secretary of Com10 merce may designate a nominated area as a 

11 NAFTA-impacted community under subsection (a) 

12 only if the area meets the requirements of para13 graphs (2) and (3) of this subsection. 

14 ‘‘(2) AREA REQUIREMENTS.—For purposes of 

15 paragraph (1), a nominated area meets the require16 ments of this paragraph if—

17 ‘‘(A) the area is within the jurisdiction of 

18 one or more local governments, 

19 ‘‘(B) the boundary of the area is contin20 uous, 

21 ‘‘(C) the area does not include an em22 powerment zone (as defined in section 1393(b)), 

23 and 

24 ‘‘(D) the area does not include a renewal 

25 community designated under section 1400E.
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1 ‘‘(3) ELIGIBILITY REQUIREMENTS.—

2 ‘‘(A) IN GENERAL.—For purposes of para3 graph (1), a nominated area meets the require4 ments of this paragraph if the State and the 

5 local governments in which it is located certify 

6 (and the Secretary of Commerce, after such re7 view of Department of Labor data and other 

8 appropriate supporting data as he deems appro9 priate, accepts such certification) that—

10 ‘‘(i) the unemployment rate in the 

11 area, as determined by the most recent 

12 available data, was at least 1 percentage 

13 point above the national unemployment 

14 rate for the period to which such data re15 late, and 

16 ‘‘(ii) in the case of—

17 ‘‘(I) a rural area, at least 300 

18 workers who live or work in the area 

19 have been certified as eligible to apply 

20 for NAFTA transitional adjustment 

21 assistance under subchapter D of 

22 chapter 2 of title II of the Trade Act 

23 of 1974 (19 U.S.C. 2341 et seq.), and 

24 ‘‘(II) an urban area, at least 500 

25 workers have been so certified. 
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1 ‘‘(B) RURAL AREA DEFINED.—For pur2 poses of this section, the term ‘rural area’ 

3 means an area—

4 ‘‘(i) which is within a local govern5 ment jurisdiction or jurisdictions with a 

6 population of less than 10,000, 

7 ‘‘(ii) which is outside of a metropoli8 tan statistical area (within the meaning of 

9 section 143(k)(2)(B)), or 

10 ‘‘(iii) which is determined by the Sec11 retary of Commerce, after consultation 

12 with the Secretary of Agriculture, to be a 

13 rural area. 

14 ‘‘(C) URBAN AREA DEFINED.—For pur15 poses of this section, the term ‘urban area’ 

16 means any area that is not a rural area. 

17 ‘‘(d) COORDINATION WITH TREATMENT OF ENTER18 PRISE COMMUNITIES.—For purposes of this title, if there 

19 are in effect with respect to the same area both—

20 ‘‘(1) a designation as a NAFTA-impacted com21 munity, and 

22 ‘‘(2) a designation as an enterprise community, 

23 both of such designations shall be given full effect with 

24 respect to such area. 
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1 ‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur2 poses of this subchapter, rules similar to the rules of para3 graphs (5) and (7) of section 1393 shall apply. 

4 ‘‘SEC. 1400N. NAFTA-IMPACTED COMMUNITY EMPLOYMENT 

5 CREDIT. 

6 ‘‘(a) AMOUNT OF CREDIT.—For purposes of section 

7 38, the amount of the NAFTA-impacted community em8 ployment credit determined under this section with respect 

9 to any employer for any taxable year is 8.5 percent of the 

10 qualified NAFTA-impacted community wages paid or in11 curred during the calendar year which ends with or within 

12 such taxable year. 

13 ‘‘(b) QUALIFIED NAFTA-IMPACTED COMMUNITY

14 WAGES.—

15 ‘‘(1) IN GENERAL.—For purposes of this sec16 tion, the term ‘qualified NAFTA-impacted commu17 nity wages’ means any wages paid or incurred by an 

18 employer for services performed by an employee 

19 while such employee is a qualified NAFTA-impacted 

20 community employee. 

21 ‘‘(2) ONLY FIRST $15,000 OF WAGES PER YEAR

22 TAKEN INTO ACCOUNT.—With respect to each quali23 fied NAFTA-impacted community employee, the 

24 amount of qualified NAFTA-impacted community 
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1 wages which may be taken into account for a cal2 endar year shall not exceed $15,000. 

3 ‘‘(3) COORDINATION WITH WORK OPPORTUNITY

4 CREDIT.—

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

6 NAFTA-impacted community wages’ shall not 

7 include wages taken into account in deter8 mining the credit under section 51. 

9 ‘‘(B) COORDINATION WITH PARAGRAPH

10 (2).—The $15,000 amount in paragraph (2) 

11 shall be reduced for any calendar year by the 

12 amount of wages paid or incurred during such 

13 year which are taken into account in deter14 mining the credit under section 51. 

15 ‘‘(c) QUALIFIED NAFTA-IMPACTED COMMUNITY

16 EMPLOYEE.—For purposes of this section—

17 ‘‘(1) IN GENERAL.—Except as otherwise pro18 vided in this subsection, the term ‘qualified NAFTA19 impacted community employee’ means, with respect 

20 to any period, any employee of an employer if—

21 ‘‘(A) substantially all of the services per22 formed during such period by such employee for 

23 such employer are performed within a NAFTA24 impacted community in a trade or business of 

25 the employer, and 
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1 ‘‘(B) the principal place of abode of such 

2 employee while performing such services is 

3 within such NAFTA-impacted community. 

4 ‘‘(2) OTHER RULES.—Rules similar to the rules 

5 of paragraphs (2) and (3) of section 1396(d) shall 

6 apply. 

7 ‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—

8 For purposes of this section, the rules of section 1397 

9 shall apply. 

10 ‘‘SEC. 1400O. INCREASE IN EXPENSING UNDER SECTION 179. 

11 ‘‘(a) GENERAL RULE.—In the case of a NAFTA-im12 pacted community business (as defined in section 1400P), 

13 for purposes of section 179— 

14 ‘‘(1) the limitation under section 179(b)(1) 

15 shall be increased by the lesser of—

16 ‘‘(A) $10,000, or 

17 ‘‘(B) the cost of section 179 property 

18 which is qualified NAFTA-impacted property 

19 placed in service during the taxable year, and 

20 ‘‘(2) the amount taken into account under sec21 tion 179(b)(2) with respect to any section 179 prop22 erty which is qualified NAFTA-impacted property 

23 shall be 50 percent of the cost thereof. 

24 ‘‘(b) RECAPTURE.—Rules similar to the rules under 

25 section 179(d)(10) shall apply with respect to any quali-
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1 fied NAFTA-impacted property which ceases to be used 

2 in a NAFTA-impacted community by a NAFTA-impacted 

3 community business. 

4 ‘‘(c) QUALIFIED NAFTA-IMPACTED PROPERTY.—

5 For purposes of this section—

6 ‘‘(1) IN GENERAL.—The term ‘qualified 

7 NAFTA-impacted property’ means section 179 prop8 erty (as defined in section 179(d)) if—

9 ‘‘(A) such property was acquired by the 

10 taxpayer after December 31, 2001, and before 

11 January 1, 2009, and 

12 ‘‘(B) such property would be qualified zone 

13 property (as defined in section 1397C) if ref14 erences to NAFTA-impacted communities were 

15 substituted for references to empowerment 

16 zones in section 1397C. 

17 ‘‘(2) CERTAIN RULES TO APPLY.—The rules of 

18 subsections (a)(2) and (b) of section 1397C shall 

19 apply for purposes of this section. 

20 ‘‘SEC. 1400P. NAFTA-IMPACTED COMMUNITY BUSINESS DE21 FINED. 

22 ‘‘For purposes of this part, the term ‘NAFTA-im23 pacted community business’ means any entity or propri24 etorship which would be a qualified business entity or 

25 qualified proprietorship under section 1397C if references 
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1 to NAFTA-impacted communities were substituted for 

2 references to empowerment zones in such section.’’. 

3 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

4 (1) NAFTA-IMPACTED COMMUNITY EMPLOY5 MENT CREDIT PART OF GENERAL BUSINESS CRED6 IT.—

7 (A) Subsection (b) of section 38 of such 

8 Code (relating to current year business credit) 

9 is amended by striking ‘‘plus’’ at the end of 

10 paragraph (12), by striking the period at the 

11 end of paragraph (13) and inserting ‘‘, plus’’, 

12 and by adding at the end the following new 

13 paragraph: 

14 ‘‘(14) the NAFTA-impacted community employ15 ment credit determined under section 1400N(a).’’. 

16 (B) Subsection (d) of section 39 of such 

17 Code (relating to carryback and carryforward of 

18 unused credits) is amended by adding at the 

19 end the following new paragraph: 

20 ‘‘(10) NO CARRYBACK OF SECTION 1400N CRED21 IT BEFORE EFFECTIVE DATE.—No portion of the 

22 unused business credit for any taxable year which is 

23 attributable to the credit determined under section 

24 1400N (relating to NAFTA-impacted community 
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1 employment credit) may be carried to any taxable 

2 year ending before January 1, 2002.’’. 

3 (2) DENIAL OF DEDUCTION FOR PORTION OF

4 WAGES EQUAL TO NAFTA-IMPACTED COMMUNITY

5 EMPLOYMENT CREDIT.—

6 (A) Subsection (a) of section 280C (relat7 ing to rule for employment credits) is amended 

8 by striking ‘‘and 1396(a)’’ and inserting 

9 ‘‘1396(a), and 1400N(a)’’. 

10 (B) Subsection (c) of section 196 (relating 

11 to deduction for certain unused business cred12 its) is amended by striking ‘‘and’’ at the end of 

13 paragraph (8), by striking the period at the end 

14 of paragraph (9) and inserting ‘‘, and’’, and by 

15 adding at the end the following new paragraph: 

16 ‘‘(10) the NAFTA-impacted community employ17 ment credit determined under section 1400N(a)’’. 

18 (3) CARRYOVERS.—Subsection (c) of section 

19 381 (relating to carryovers in certain corporate ac20 quisitions) is amended by adding at the end the fol21 lowing new paragraph: 

22 ‘‘(27) NAFTA-IMPACTED COMMUNITY PROVI23 SIONS.—The acquiring corporation shall take into 

24 account (to the extent proper to carry out the pur25 poses of this section and subchapter XI, and under 
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1 such regulations as may be prescribed by the Sec2 retary) the items required to be taken into account 

3 for purposes of subchapter XI in respect of the dis4 tributor or transferor corporation.’’. 

5 (c) CLERICAL AMENDMENTS.—The table of sub6 chapters for chapter 1 is amended by adding at the end 

7 the following new item:

‘‘Subchapter Z. NAFTA-Impacted Communities.’’

8 SEC. 3. GRANTS FOR JOB TRAINING ASSISTANCE FOR 

9 NAFTA-IMPACTED COMMUNITIES. 

10 (a) IN GENERAL.—The Secretary of Labor shall pro11 vide grants to States that contain NAFTA-impacted com12 munities, as designated under section 1400M of the Inter13 nal Revenue Code of 1986 (as added by section 2(a) of 

14 this Act), for the purpose of providing sub-grants to non15 profit organizations and community or junior colleges in 

16 order to provide short-term job training courses, courses 

17 in entrepreneurism and self-employment, and other related 

18 job training assistance that will promote the economic self19 sufficiency of individuals located in NAFTA-impacted 

20 communities. 

21 (b) MAXIMUM AMOUNT OF GRANT.—The total 

22 amount provided under a grant to a State under sub23 section (a) for a fiscal year may not exceed the product 

24 of—

25 (1) $1,000,000; and 
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1 (2) the number of NAFTA-impacted commu2 nities located in the State. 

3 (c) AUTHORIZATION OF APPROPRIATIONS.—

4 (1) IN GENERAL.—There are authorized to be 

5 appropriated to carry out this section $35,000,000 

6 for each of the fiscal years 2004 through 2010. 

7 (2) AVAILABILITY.—Amounts appropriated pur8 suant to the authorization of appropriations under 

9 paragraph (1) are authorized to remain available 

10 until expended.

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