II

103D CONGRESS

1ST SESSION S. 1097

To provide for the establishment of rural development investment zones,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 15, 1993

Mr. DORGAN introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To provide for the establishment of rural development

investment zones, 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,

3 SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

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

5 ‘‘Rural Development Investment Zone Act of 1993’’.

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment

9 to, or repeal of, a section or other provision, the reference
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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986.

3 SEC. 2. PURPOSES.

4 The purposes of this Act are to provide for the estab5 lishment of Rural Development Investment Zones

6 (RDIZs) to stimulate the creation of new jobs and busi7 nesses, to promote revitalization of economically distressed

8 rural areas, and to provide increased economic opportunity

9 for residents thereof, primarily by providing or encourag10 ing—

11 (1) tax relief at the Federal, State, and local

12 levels,

13 (2) increased Federal and State assistance,

14 (3) regulatory relief at the Federal, State, and

15 local levels, and

16 (4) improved local services, particularly through

17 the increased involvement of private, local, and com18 munity organizations.

19 TITLE I—DESIGNATION OF

20 RURAL DEVELOPMENT IN21 VESTMENT ZONES

22 SEC. 101. DESIGNATION OF ZONES.

23 (a) GENERAL RULE.—Chapter 80 (relating to gen24 eral rules) is amended by adding at the end thereof the

25 following new subchapter:
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1 ‘‘Subchapter D—Designation of Rural

2 Development Investment Zones

‘‘Sec. 7881. Designation.

3 ‘‘SEC. 7881. DESIGNATION.

4 ‘‘(a) DESIGNATION OF ZONES.—

5 ‘‘(1) DEFINITIONS.—For purposes of this title,

6 the term ‘rural development investment zone’ means

7 any area—

8 ‘‘(A) which is nominated by 1 or more

9 local governments and the State or States in

10 which it is located for designation as a rural de11 velopment investment zone (hereinafter in this

12 section referred to as a ‘nominated area’), and

13 ‘‘(B) which the Secretary of the Treasury

14 (after consultation with the Secretaries of Agri15 culture, Commerce, and Labor, and the Admin16 istrator of the Small Business Administration)

17 designates as a rural development investment

18 zone.

19 ‘‘(2) LIMITATIONS ON DESIGNATIONS.—

20 ‘‘(A) PUBLICATION OF REGULATIONS.—

21 Before designating any area as a rural develop22 ment investment zone and not later than 4

23 months following the date of the enactment of

24 this section, the Secretary of the Treasury shall
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1 prescribe by regulation, after consultation with

2 the officials described in paragraph (1)(B)—

3 ‘‘(i) the procedures for nominating an

4 area under paragraph (1)(A),

5 ‘‘(ii) the parameters relating to the

6 size and population characteristics of a

7 rural development investment zone, and

8 ‘‘(iii) the manner in which nominated

9 areas will be compared based on the cri10 teria specified in subsection (d) and the

11 other factors specified in subsection (f).

12 ‘‘(B) TIME LIMITATIONS.—The Secretary

13 of the Treasury shall designate nominated areas

14 as rural development investment zones only

15 during the 36-month period beginning on the

16 later of—

17 ‘‘(i) the first day of the first month

18 following the month in which the effective

19 date of the regulations described in sub20 paragraph (A) occurs, or

21 ‘‘(ii) January 1, 1993.

22 ‘‘(C) NUMBER OF DESIGNATIONS.—The

23 Secretary of the Treasury may not designate—
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1 ‘‘(i) more than 100 nominated areas

2 as rural development investment zones

3 under this section, and

4 ‘‘(ii) more than 40 nominated areas

5 as rural development investment zones

6 during the first 12-month period beginning

7 on the date determined under subpara8 graph (B) and each subsequent 12-month

9 period.

10 ‘‘(D) PROCEDURAL RULES.—The Sec11 retary of the Treasury shall not make any des12 ignation of an area as a rural development in13 vestment zone under paragraph (1) unless—

14 ‘‘(i) the local government and the

15 State in which the nominated area is lo16 cated have the authority—

17 ‘‘(I) to nominate such area for

18 designation as a rural development in19 vestment zone,

20 ‘‘(II) to make the State and local

21 commitments under subsection (d),

22 and

23 ‘‘(III) to provide assurances sat24 isfactory to the Secretary of the
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1 Treasury that such commitments will

2 be fulfilled,

3 ‘‘(ii) a nomination therefor is submit4 ted in such a manner and in such form,

5 and contains such information, as the Sec6 retary of the Treasury shall by regulation

7 prescribe,

8 ‘‘(iii) the Secretary of the Treasury

9 determines that any information furnished

10 is reasonably accurate, and

11 ‘‘(iv) the State and local governments

12 certify that no portion of such area is al13 ready included in a rural development in14 vestment zone or in an area otherwise

15 nominated to be a rural development in16 vestment zone.

17 ‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EF18 FECT.—

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

20 as a rural development investment zone shall remain

21 in effect during the period beginning on the date of

22 the designation and ending on the earliest of—

23 ‘‘(A) December 31 of the 12th calendar

24 year following the calendar year in which such

25 date occurs,
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1 ‘‘(B) the termination date designated by

2 the State and local governments as provided

3 in the nomination submitted under subsection

4 (a)(2)(D)(ii), or

5 ‘‘(C) the date the Secretary of the Treas6 ury revokes such designation under paragraph

7 (2).

8 ‘‘(2) REVOCATION OF DESIGNATION.—The Sec9 retary of the Treasury after consultation with the of10 ficials described in subsection (a)(1)(B), may revoke

11 the designation of an area if the Secretary of the

12 Treasury determines that the local government or

13 the State in which it is located is not complying sub14 stantially with the State and local commitments

15 under subsection (d).

16 ‘‘(3) DESIGNATION SHALL NOT TAKE EFFECT

17 UNLESS INVENTORY OF HISTORIC PROPERTIES.—

18 Notwithstanding paragraph (1)—

19 ‘‘(A) within 60 days after the date of the

20 designation of an area as a rural development

21 investment zone (determined without regard to

22 this paragraph), the State or local government

23 of such area shall submit to the Secretary of

24 the Treasury an inventory of historic properties

25 within such area, and
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1 ‘‘(B) the date of such designation shall not

2 be earlier than the date on which such inven3 tory is submitted.

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

5 ‘‘(1) IN GENERAL.—The Secretary of the

6 Treasury may make a designation of any nominated

7 area under subsection (a)(1) only if it meets the re8 quirements of paragraphs (2) and (3).

9 ‘‘(2) AREA REQUIREMENTS.—A nominated area

10 meets the requirements of this paragraph if—

11 ‘‘(A) the area is—

12 ‘‘(i) within a local government juris13 diction or jurisdictions which are not

14 central cities of a metropolitan statistical

15 area (within the meaning of section

16 143(k)(2)(B)) and which have a population

17 of less than 50,000 (as determined by the

18 most recent census data available),

19 ‘‘(ii) outside of a metropolitan

20 statistical area (within the meaning of sec21 tion 143(k)(2)(B)), or

22 ‘‘(iii) determined by the Secretary of

23 the Treasury, after consultation with the

24 Secretary of Agriculture, to be a rural

25 area,
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1 ‘‘(B) the area—

2 ‘‘(i) does not exceed 10,000 square

3 miles,

4 ‘‘(ii) consists of areas within not more

5 than 4 contiguous counties,

6 ‘‘(iii) has a boundary which is contin7 uous, or consists of not more than 3 non8 contiguous parcels, and

9 ‘‘(iv) is located entirely within 1

10 State, and

11 ‘‘(C) the area has a population, as deter12 mined by the most recent census data available,

13 of at least 1,000.

14 ‘‘(3) ELIGIBILITY REQUIREMENTS.—For pur15 poses of paragraph (1), a nominated area meets the

16 requirements of this paragraph if the State and local

17 governments in which it is located certify and the

18 Secretary of the Treasury, after such review of sup19 porting data as he deems appropriate, accepts such

20 certification, that the area meets the following cri21 teria:

22 ‘‘(A) DISTRESS.—The area is one of perva23 sive poverty, unemployment, and general dis24 tress.
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1 ‘‘(B) ADDITIONAL CRITERIA.—The area

2 meets not less than 2 of the following criteria:

3 ‘‘(i) UNEMPLOYMENT RATE.—The un4 employment rate (as determined by the ap5 propriate available data) is not less than

6 1.5 times the national unemployment rate.

7 ‘‘(ii) POVERTY RATE.—The poverty

8 rate (as determined by the most recent

9 census data available) for not less than 90

10 percent of the population census tracts (or

11 where not tracted, the equivalent county

12 divisions as defined by the Bureau of the

13 Census for the purposes of defining pov14 erty areas) within the area is not less than

15 20 percent.

16 ‘‘(iii) JOB LOSS.—The amount of

17 wages attributable to employment in the

18 area, and subject to tax under section

19 3301, during the preceding calendar year

20 is not more than 90 percent of the annual

21 average of such wages for calendar years

22 1986 through 1990, adjusted as provided

23 in paragraph (4).

24 ‘‘(iv) OUT-MIGRATION.—The popu25 lation of the area decreased (as determined
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1 by the most recent census data available)

2 by 10 percent or more between 1980 and

3 1990.

4 ‘‘(4) INFLATION ADJUSTMENT.—In making the

5 determination under paragraph (3)(B)(iii) for any

6 calendar year (the ‘determination year’), the wages

7 for each of the calendar years 1986 through 1990

8 shall be adjusted in the same manner as under sec9 tion 1(f) to reflect any increase in the consumer

10 price index between each of such calendar years and

11 the calendar year preceding the determination year.

12 ‘‘(d) REQUIRED STATE AND LOCAL COMMIT13 MENTS.—

14 ‘‘(1) IN GENERAL.—No nominated area shall be

15 designated as a rural development investment zone

16 unless the local government and the State in which

17 it is located agree in writing that, during any period

18 during which the area is a rural development invest19 ment zone, such governments will follow a specified

20 course of action designed to reduce the various bur21 dens borne by employers or employees in such area.

22 ‘‘(2) COURSE OF ACTION.—The course of action

23 under paragraph (1) may be implemented by both

24 such governments and private nongovernmental enti-
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1 ties, may be funded from proceeds of any Federal

2 program, and may include, but is not limited to—

3 ‘‘(A) a reduction of tax rates or fees apply4 ing within the rural development investment

5 zone,

6 ‘‘(B) an increase in the level or efficiency

7 of local services within the rural development

8 investment zone,

9 ‘‘(C) actions to reduce, remove, simplify, or

10 streamline governmental requirements applying

11 within the rural development investment zone,

12 ‘‘(D) involvement in the program by pri13 vate entities, organizations, neighborhood asso14 ciations, and community groups, particularly

15 those within the nominated area, including a

16 commitment from such private entities to pro17 vide jobs and job training for, and technical, fi18 nancial or other assistance to, employers, em19 ployees, and residents of the nominated area,

20 and

21 ‘‘(E) mechanisms to increase the equity

22 ownership of residents and employees within the

23 rural development investment zone.

24 ‘‘(3) SUBSEQUENT MODIFICATION OF COURSE

25 OF ACTION.—The Secretary of the Treasury may by
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1 regulation prescribe procedures for modifying a

2 course of action within a rural development invest3 ment zone under paragraph (1) following designa4 tion of such zone.

5 ‘‘(e) PRIORITY OF DESIGNATION.—In choosing nomi6 nated areas for designation, the Secretary of the Treasury

7 shall give special preference to the areas with respect to

8 which the strongest and highest quality contributions de9 scribed in subsection (d)(2) have been promised as part

10 of the course of action, taking into consideration the fiscal

11 ability of the nominating State and local governments to

12 provide tax relief. The Secretary shall also give preference

13 to—

14 ‘‘(1) the nominated areas with respect to which

15 the nominating State and local governments have

16 provided the most effective and enforceable guaran17 tees that the proposed course of action under sub18 section (d) will actually be carried out during the pe19 riod of the rural development investment zone des20 ignation,

21 ‘‘(2) the nominated areas with high levels of

22 poverty, unemployment, and general distress, par23 ticularly the areas—
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1 ‘‘(A) which are near areas with concentra2 tions of disadvantaged workers or long-term un3 employed or under-employed individuals, and

4 ‘‘(B) with respect to which there is a

5 strong likelihood that residents of the area de6 scribed in subparagraph (A) will receive jobs if

7 the area is designated as a rural development

8 investment zone,

9 ‘‘(3) the nominated areas the size and location

10 of which—

11 ‘‘(A) will primarily stimulate new economic

12 activity, and

13 ‘‘(B) minimize unnecessary tax losses to

14 the Federal Government,

15 ‘‘(4) the nominated areas with respect to which

16 private entities have made the most substantial com17 mitments in additional resources and contributions,

18 including the creation of new or expanded business

19 activities, and

20 ‘‘(5) the nominated areas which best exhibit

21 such other factors determined by the Secretary of

22 the Treasury as are—

23 ‘‘(A) consistent with the intent of the rural

24 development investment zone program, and
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1 ‘‘(B) important to minimizing the unneces2 sary loss of tax revenues to the Federal Govern3 ment.

4 ‘‘(f) DEFINITIONS.—For the purposes of this title—

5 ‘‘(1) GOVERNMENTS.—If more than 1 govern6 ment seeks to nominate an area as a rural develop7 ment investment zone, any reference to, or require8 ment of, this section shall apply to all such govern9 ments.

10 ‘‘(2) STATE.—The term ‘State’ shall also in11 clude the Commonwealth of Puerto Rico, the Virgin

12 Islands, Guam, American Samoa, the Common13 wealth of the Northern Mariana Islands, the Repub14 lic of the Marshall Islands, the Federated States of

15 Micronesia, the Republic of Palau; and any other

16 possession of the United States.

17 ‘‘(3) LOCAL GOVERNMENT.—The term ‘local

18 government’ means—

19 ‘‘(A) any county, city, town, township, par20 ish, village, or other general purpose political

21 subdivision of a State, and

22 ‘‘(B) any combination of political subdivi23 sions described in subparagraph (A) recognized

24 by the Secretary of the Treasury.’’
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1 (b) CONFORMING AMENDMENT.—The table of sub2 chapters for chapter 80 is amended by adding at the end

3 thereof the following new item:

‘‘Subchapter D. Designation of rural development investment

zones.’’

4 SEC. 102. EVALUATION AND REPORTING REQUIREMENTS.

5 Not later than the close of the third calendar year

6 after the calendar year in which the Secretary of the

7 Treasury first designates areas as rural development in8 vestment zones under section 7881 of the Internal Reve9 nue Code of 1986, and at the close of each third calendar

10 year thereafter, the Secretary of the Treasury shall pre11 pare and submit to the Congress a report on the effects

12 of such designation in accomplishing the purposes of this

13 Act.

14 SEC. 103. INTERACTION WITH OTHER FEDERAL PROGRAMS.

15 (a) TAX REDUCTIONS.—Any reduction of taxes under

16 any required program of State and local commitment

17 under section 7881(d) of the Internal Revenue Code of

18 1986 shall be disregarded in determining the eligibility of

19 a State or local government for, or the amount or extent

20 of, any assistance or benefits under any law of the United

21 States.

22 (b) COORDINATION WITH RELOCATION ASSIST23 ANCE.—The designation of a rural development invest-
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1 ment zone under section 7881 of the Internal Revenue

2 Code of 1986 shall not—

3 (1) constitute approval of a Federal or federally

4 assisted program or project (within the meaning of

5 the Uniform Relocation Assistance and Real Prop6 erty Acquisition Policies Act of 1970 (42 U.S.C.

7 4601 et seq.)), or

8 (2) entitle any person displaced from real prop9 erty located in such zone to any rights or any bene10 fits under such Act.

11 (c) COORDINATION WITH ENVIRONMENTAL POL12 ICY.—Designation of a rural development investment zone

13 under section 7881 of the Internal Revenue Code of 1986

14 shall not constitute a Federal action for purposes of apply15 ing the requirements of the National Environmental Pol16 icy Act of 1969 (42 U.S.C. 4321 et seq.) or other provi17 sions of Federal law relating to the protection of the envi18 ronment.

19 TITLE II—FEDERAL INCOME TAX

20 INCENTIVES

21 Subtitle A—Credits for Employers

22 SEC. 201. CREDIT FOR RURAL DEVELOPMENT INVESTMENT

23 ZONE EMPLOYERS.

24 (a) CREDIT FOR INCREASED RURAL DEVELOPMENT

25 INVESTMENT ZONE EMPLOYMENT.—Subpart B of part
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1 IV of subchapter A of chapter 1 (relating to foreign tax

2 credit, etc.) is amended by inserting after section 30 the

3 following new section:

4 ‘‘SEC. 30A. CREDIT FOR RURAL DEVELOPMENT INVEST5 MENT ZONE EMPLOYMENT.

6 ‘‘(a) IN GENERAL.—There shall be allowed as a cred7 it against the tax imposed by this chapter for the taxable

8 year an amount equal to 10 percent of the qualified in9 creased employment expenditures of the taxpayer for the

10 taxable year.

11 ‘‘(b) LIMITATIONS BASED ON AMOUNT OF TAX.—

12 ‘‘(1) IN GENERAL.—The credit allowed by sub13 section (a) for a taxable year shall not exceed the ex14 cess (if any) of—

15 ‘‘(A) the regular tax liability for the tax16 able year reduced by the sum of the credits al17 lowable under subpart A and sections 27, 28,

18 29, 30, over

19 ‘‘(B) the tentative minimum tax for the

20 taxable year.

21 ‘‘(2) CARRYBACK AND CARRYOVER OF UNUSED

22 CREDIT.—

23 ‘‘(A) ALLOWANCE OF CREDIT.—If the

24 amount of the credit determined under this sec25 tion for any taxable year exceeds the limitation
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1 provided by paragraph (1) for such taxable year

2 (hereinafter in this paragraph referred to as the

3 ‘unused credit year’), such excess shall be—

4 ‘‘(i) a rural development investment

5 zone employment credit carryback to each

6 of the 3 taxable years preceding the un7 used credit year, and

8 ‘‘(ii) a rural development investment

9 zone employment credit carryover to each

10 of the 15 taxable years following the un11 used credit year,

12 and shall be added to the amount allowable as

13 a credit by this section for such years. If any

14 portion of such excess is a carryback to a tax15 able year beginning before January 1, 1993,

16 this section shall be deemed to have been in ef17 fect for such taxable year for purposes of allow18 ing such carryback as a credit under this sec19 tion. The entire amount of the unused credit

20 for an unused credit year shall be carried to the

21 earliest of the 18 taxable years to which (by

22 reason of clauses (i) and (ii)) such credit may

23 be carried, and then to each of the other 17

24 taxable years to the extent that, because of the

25 limitation contained in subparagraph (B), such
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1 unused credit may not be added for a prior tax2 able year to which such unused credit may be

3 carried.

4 ‘‘(B) LIMITATION.—The amount of the un5 used credit which may be added under subpara6 graph (A) for any preceding or succeeding tax7 able year shall not exceed the amount by which

8 the limitation provided by paragraph (1) for

9 such taxable year exceeds the sum of—

10 ‘‘(i) the credit allowable under this

11 section for such taxable year, and

12 ‘‘(ii) the amounts which, by reason of

13 this paragraph, are added to the amount

14 allowable for such taxable year and which

15 are attributable to taxable years preceding

16 the unused credit year.

17 ‘‘(c) QUALIFIED INCREASED EMPLOYMENT EXPEND18 ITURES DEFINED.—For purposes of this section—

19 ‘‘(1) IN GENERAL.—The term ‘qualified in20 creased employment expenditures’ means the lesser

21 of—

22 ‘‘(A) the increased zone employment ex23 penditures, or

24 ‘‘(B) the increased aggregate employment

25 expenditures.
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1 ‘‘(2) INCREASED ZONE EMPLOYMENT EXPENDI2 TURES.—The term ‘increased zone employment ex3 penditures’ means, with respect to any rural develop4 ment investment zone, the excess of—

5 ‘‘(A) the qualified wages paid or incurred

6 by the employer during the taxable year to

7 qualified employees with respect to such zone,

8 over

9 ‘‘(B) the base period wages of the em10 ployer with respect to such zone.

11 ‘‘(3) INCREASED AGGREGATE EMPLOYMENT EX12 PENDITURES.—The term ‘increased aggregate em13 ployment expenditures’ means the excess of—

14 ‘‘(A) the qualified wages paid or incurred

15 by the employer during the taxable year to all

16 employees, over

17 ‘‘(B) the base period wages of the em18 ployer.

19 ‘‘(4) LIMITATION AS TO QUALIFIED WAGES

20 TAKEN INTO ACCOUNT.—The amount of any quali21 fied wages taken into account under this subsection

22 for any taxable year with respect to any employee

23 may not exceed 2.5 times the dollar limitation in ef24 fect under section 3306(b)(1) for the calendar year

25 with or within which such taxable year ends.
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1 ‘‘(5) BASE PERIOD WAGES.—

2 ‘‘(A) IN GENERAL.—The term ‘base period

3 wages’ means, with respect to any rural devel4 opment investment zone, the amount of wages

5 paid to employees during the 12-month period

6 preceding the date on which the rural develop7 ment investment zone was designated as such

8 under section 7881, or the date on which the

9 rural development investment zone is des10 ignated under State law, enacted after January

11 1, 1981, if earlier, which would have been quali12 fied wages paid to qualified employees if such

13 designation had been in effect for such period.

14 ‘‘(B) RULES OF SPECIAL APPLICATION.—

15 For purposes of subparagraph (A)—

16 ‘‘(i) subsection (e)(1) shall be applied

17 by substituting ‘12-month period’ for ‘tax18 able year’ each place it appears, and

19 ‘‘(ii) the dollar limitation taken into

20 account under paragraph (2) in computing

21 qualified wages shall be the amount in ef22 fect for taxable year for which the

23 amount of the credit under subsection (a)

24 is being computed.
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1 ‘‘(d) QUALIFIED WAGES DEFINED.—For purposes of

2 this section—

3 ‘‘(1) IN GENERAL.—Except as otherwise pro4 vided in this subsection, the term ‘qualified wages’

5 has the meaning given to the term ‘wages’ by sub6 section (b) of section 3306 (determined without re7 gard to any dollar limitation contained in such sec8 tion).

9 ‘‘(2) REDUCTION FOR CERTAIN FEDERALLY

10 FUNDED PAYMENTS.—For purposes of this section

11 the wages paid or incurred by an employer for any

12 period shall not include the amount of any Federally

13 funded payments the employer receives or is entitled

14 to receive for on-the-job training of such individual

15 for such period.

16 ‘‘(3) SPECIAL RULES FOR AGRICULTURAL AND

17 RAILWAY LABOR.—Under regulations prescribed by

18 the Secretary, rules similar to the rules of section

19 51(h) shall apply with respect to services described

20 in subparagraphs (A) and (B) of section 51(h)(1).

21 ‘‘(e) QUALIFIED EMPLOYEE DEFINED.—

22 ‘‘(1) IN GENERAL.—For purposes of this sec23 tion, the term ‘qualified employee’ means an individ24 ual—
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1 ‘‘(A) at least 90 percent of whose services

2 for the employer during the taxable year are di3 rectly related to the conduct of the employer’s

4 trade or business located in a rural development

5 investment zone, and

6 ‘‘(B) who performs at least 50 percent of

7 his services for the employer during the taxable

8 year in a rural development investment zone.

9 ‘‘(2) EXCEPTION FOR INDIVIDUALS WITH RE10 SPECT TO WHOM CREDIT IS DETERMINED UNDER

11 SECTION 51(a).—The term ‘qualified employee’ shall

12 not include an individual with respect to whom any

13 credit for the employer is determined under section

14 51(a) for the taxable year (relating to targeted jobs

15 credit).

16 ‘‘(f) SPECIAL RULES.—For purposes of this sec17 tion—

18 ‘‘(1) APPLICATION TO CERTAIN ENTITIES,

19 ETC.—Under regulations prescribed by the Sec20 retary, rules similar to the rules of section 52 (other

21 than subsection (b) thereof) and section 30(f)(3) (as

22 in effect before the enactment of the Tax Reform

23 Act of 1986) shall apply.

24 ‘‘(2) PERIODS OF LESS THAN A YEAR.—If des25 ignation of an area as a rural development invest-
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1 ment zone under section 7881 occurs, expires, or is

2 revoked on a date other than the first or last day

3 of the taxable year of the taxpayer, or in the case

4 of a short taxable year—

5 ‘‘(A) the limitation specified in subsection

6 (c)(2), and the base period wages determined

7 under subsection (c)(3), shall be adjusted on a

8 pro rata basis (based upon the number of

9 days), and

10 ‘‘(B) the reduction specified in subsection

11 (d)(2) and the 90 percent and 50 percent tests

12 set forth in subsection (e)(1) shall be deter13 mined by reference to the portion of the taxable

14 year during which the designation of the area

15 as a rural development investment zone is in ef16 fect.

17 ‘‘(g) PHASEOUT OF CREDIT.—

18 ‘‘(1) IN GENERAL.—Except as provided in para19 graph (2), in determining the amount of the credit

20 for a taxable year under subsection (a) with respect

21 to qualified wages paid or incurred for services per22 formed in a rural development investment zone, the

23 following percentages shall be substituted for ‘10

24 percent’ in subsection (a):

25 ‘‘(A) 7.5 percent in the earlier of—
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1 ‘‘(i) the taxable year which includes

2 the date which is 21 years after the date

3 on which such rural development invest4 ment zone was designated under section

5 7881, or

6 ‘‘(ii) the taxable year which includes

7 the date which is 4 years before the date

8 (if any) on which such rural development

9 investment zone ceases to be a zone under

10 section 7881(b)(1)(B),

11 ‘‘(B) 5 percent in the next succeeding tax12 able year,

13 ‘‘(C) 2.5 percent in the second next suc14 ceeding taxable year, and

15 ‘‘(D) zero thereafter.

16 ‘‘(2) REVOCATION OF DESIGNATION.—If the

17 designation of an area as a rural development in18 vestment zone is revoked under section 7881(b)(2),

19 such area shall continue to be treated as a rural de20 velopment investment zone for the period of 3 tax21 able years beginning after the date of such revoca22 tion except that only the allowable percentage of the

23 amount of the credit which would (but for this para24 graph) be allowable under this section for such a

25 year shall be allowed. For purposes of the preceding
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1 sentence, the term ‘allowable percentage’ means the

2 amount determined in accordance with the following

3 table:

‘‘If the taxable year beginning The allowable

after the revocation is: percentage is:

The first such year .................................................... 75

The second such year ................................................ 50

The third such year ................................................... 25.

4 ‘‘(h) REGULATIONS.—The Secretary shall prescribe

5 such regulations as may be necessary to carry out the pur6 poses of this section, including regulations to prevent the

7 abuse of such purposes by denying the credit allowable

8 under this section to employers which relocate their busi9 nesses in a rural development investment zone while dis10 placing former employees or which otherwise conduct their

11 businesses so as to take advantage of the credit allowable

12 by this section without furthering such purposes.’’

13 (b) NO DEDUCTION ALLOWED.—Section 280C (re14 lating to disallowance of deductions for certain expenses

15 for which credits are allowable) is amended by adding at

16 the end thereof the following new subsection:

17 ‘‘(d) RULE FOR SECTION 30A CREDITS.—No deduc18 tion shall be allowed for that portion of the wages or sala19 ries paid or incurred for the taxable year which is equal

20 to the amount of the credit allowable under section 30A

21 (relating to the employment credit for rural development

22 investment zone businesses). This subsection shall be ap-
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1 plied under a rule similar to the rule under the last sen2 tence of subsection (a).’’

3 (c) TECHNICAL AMENDMENTS RELATED TO CARRY4 OVER AND CARRYBACK OF CREDITS.—

5 (1) CARRYOVER OF CREDIT.—

6 (A) Subsection (c) of section 381 (relating

7 to items of the distributor or transferor cor8 poration) is amended by adding at the end

9 thereof the following new paragraph:

10 ‘‘(26) CREDIT UNDER SECTION 30A.—The ac11 quiring corporation shall take into account (to the

12 extent proper to carry out the purposes of this sec13 tion and section 30A, and under such regulations as

14 may be prescribed by the Secretary) the items re15 quired to be taken into account for purposes of sec16 tion 30A in respect to the distributor or transferor

17 corporation.’’

18 (B) Paragraph (2) of section 383(a) (relat19 ing to special limitations on certain excess cred20 its, etc.) is amended by redesignating subpara21 graphs (A) and (B) as subparagraphs (B) and

22 (C), respectively, and by inserting before sub23 paragraph (B) (as so redesignated) the follow24 ing new subparagraph:
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1 ‘‘(A) any unused rural development invest2 ment zone employment credit under section

3 30A,’’.

4 (2) CARRYBACK OF CREDIT.—

5 (A) Subparagraph (C) of section

6 6511(d)(4) (defining credit carryback) is

7 amended by inserting ‘‘any rural development

8 investment zone employment credit under sec9 tion 30A(b) and’’ after ‘‘means’’.

10 (B) Subsection (a) of section 6411 (relat11 ing to tentative carryback and refund adjust12 ments) is amended—

13 (i) by inserting ‘‘by a rural develop14 ment investment zone employment credit

15 carryback under section 30A,’’ after

16 ‘‘172(b),’’ in the first sentence, and

17 (ii) by striking out ‘‘net capital loss’’

18 the first place it appears in the second sen19 tence and all that follows before ‘‘in the

20 manner and form’’ and inserting in lieu

21 thereof the following: ‘‘net capital loss, un22 used rural development investment zone

23 employment credit, or unused business

24 credit from which the carryback results

25 and within a period of 12 months after
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1 such taxable year or, with respect to any

2 portion of a rural development investment

3 zone employment credit carryback or busi4 ness credit carryback attributable to a net

5 operating loss carryback or a net capital

6 loss carryback from a subsequent taxable

7 year, within a period of 12 months from

8 the end of such subsequent taxable year or,

9 with respect to any portion of a business

10 credit carryback attributable to a rural de11 velopment investment zone employment

12 credit carryback from a subsequent taxable

13 year within a period of 12 months from

14 the end of such subsequent taxable year,’’.

15 (C) Paragraph (1) of section 6411(a) is

16 amended by inserting ‘‘unused rural develop17 ment investment zone employment credit,’’ after

18 ‘‘net capital loss,’’.

19 (d) CLERICAL AMENDMENT.—The table of sections

20 for subpart B of part IV of subchapter A of chapter 1

21 is amended by adding after the item relating to section

22 30 the following new item:

‘‘Sec. 30A. Credit for rural development investment zone employment.’’
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1 (e) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1992.

4 Subtitle B—Credits for Investment

5 in Tangible Property in Rural

6 Development Investment Zones

7 SEC. 211. INVESTMENT TAX CREDIT FOR NEW RURAL DE8 VELOPMENT INVESTMENT ZONE CONSTRUC9 TION PROPERTY.

10 (a) ALLOWANCE OF INVESTMENT CREDIT.—Section

11 46 (relating to amount of credit) is amended by striking

12 ‘‘and’’ at the end of paragraph (2), by striking the period

13 at the end of paragraph (3) and inserting ‘‘, and’’, and

14 by adding at the end thereof the following new paragraph:

15 ‘‘(4) the rural development investment zone

16 credit.’’

17 (b) RURAL DEVELOPMENT INVESTMENT ZONE

18 CREDIT.—Section 48 is amended by adding at the end

19 thereof the following new subsection:

20 ‘‘(c) RURAL DEVELOPMENT INVESTMENT ZONE

21 CREDIT.—

22 ‘‘(1) IN GENERAL.—For purposes of section 46,

23 the rural development investment zone credit for any

24 taxable year is the applicable percentage of the basis

25 of each new rural development investment zone con-
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1 struction property placed in service during such tax2 able year.

3 ‘‘(2) APPLICABLE PERCENTAGE.—

4 ‘‘(A) IN GENERAL.—The applicable per5 centage is the percentage equal to the product

6 of—

7 ‘‘(i) 10 percent, and

8 ‘‘(ii) the taxpayer’s employment

9 growth success percentage for the taxable

10 year in which the property is placed in

11 service with respect to the rural develop12 ment investment zone in which such prop13 erty is placed in service.

14 ‘‘(B) EMPLOYMENT GROWTH SUCCESS

15 PERCENTAGE.—For purposes of subparagraph

16 (A), the employment growth success percentage

17 with respect to a rural development investment

18 zone for any taxable year is the percentage (but

19 not over 100 percent) which—

20 ‘‘(i) the employment growth percent21 age of the taxpayer with respect to such

22 zone for such year, bears to

23 ‘‘(ii) the target employment growth

24 percentage.
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1 ‘‘(C) EMPLOYMENT GROWTH PERCENT2 AGE.—For purposes of subparagraph (B), the

3 employment growth percentage with respect to

4 a rural development investment zone for any

5 taxable year is the average annual percentage

6 which—

7 ‘‘(i) the qualified increased employ8 ment expenditures (as defined in section

9 30A) with respect to such zone for each

10 taxable year beginning after the base pe11 riod and before the taxable year for which

12 the credit is being determined, bears to

13 ‘‘(ii) the base period wages (as defined

14 in such section) of the employer

15 ‘‘(D) TARGET GROWTH EMPLOYMENT PER16 CENTAGE.—For purposes of this paragraph, the

17 target growth employment percentage is 5 per18 cent.

19 ‘‘(E) PHASEOUT OF CREDIT AS DEVELOP20 MENT INVESTMENT ZONE ENDS.—Subpara21 graph (A) shall be applied by substituting the

22 following percentages for 10 percent:

23 ‘‘(i) For the taxable year described in

24 section 30A(g)(1)(A), 7.5.
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1 ‘‘(ii) For the next succeeding taxable

2 year, 5.

3 ‘‘(iii) For the second succeeding tax4 able year, 2.5.

5 ‘‘(iv) For any subsequent taxable

6 year, zero.’’

7 ‘‘(3) NEW RURAL DEVELOPMENT INVESTMENT

8 ZONE CONSTRUCTION PROPERTY.—For purposes of

9 this subsection, the term ‘new rural development in10 vestment zone construction property’ means property

11 which is—

12 ‘‘(A) located in a rural development invest13 ment zone,

14 ‘‘(B) nonresidential real property, residen15 tial rental real property, or real property which

16 has a class life of more than 12.5 years (as

17 such terms are defined in section 168),

18 ‘‘(C) used by the taxpayer predominantly

19 in the active conduct of a trade or business

20 within a rural development investment zone,

21 and

22 ‘‘(D) either—

23 ‘‘(i) the construction, reconstruction,

24 rehabilitation, renovation, expansion, or

25 erection of which is completed by the tax-
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1 payer during the period the designation as

2 a zone is in effect under section 7881, or

3 ‘‘(ii) acquired during such period if

4 the original use of such property com5 mences with the taxpayer and commences

6 during such period.

7 ‘‘(4) SPECIAL RULES.—

8 ‘‘(A) PROPERTY INELIGIBLE IF ACQUIRED

9 FROM RELATED PERSON.—The term ‘new rural

10 development investment zone construction prop11 erty’ shall not include property acquired (di12 rectly or indirectly) by the taxpayer from a per13 son who is related to the taxpayer (within the

14 meaning of section 465(b)(3)(C)).

15 ‘‘(B) CREDIT FOR PROGRESS EXPENDI16 TURES ALLOWABLE BUT ONLY BASIS ATTRIB17 UTABLE TO CONSTRUCTION DURING PERIOD

18 TAKEN INTO ACCOUNT.—Rules similar to the

19 rules of section 47(d) shall apply but in apply20 ing such rules in the case of property described

21 in paragraph (1)(D)(i), there shall be taken

22 into account only that portion of the basis

23 which is properly attributable to the activities

24 described in such paragraph carried on during

25 such period.
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1 ‘‘(3) REAL ESTATE RENTAL.—For purposes of

2 this section, ownership of residential, commercial, or

3 industrial real property within a rural development

4 investment zone for rental shall be treated as the ac5 tive conduct of a trade or business in a rural devel6 opment investment zone.’’

7 (d) LODGING TO QUALIFY.—Paragraph (2) of section

8 50(b) (relating to property used for lodging) is amended—

9 (1) by striking out ‘‘and’’ at the end of sub10 paragraph (C),

11 (2) by striking out the period at the end of sub12 paragraph (D) and inserting in lieu thereof ‘‘, and,’’

13 and

14 (3) by adding at the end thereof the following

15 new subparagraph:

16 ‘‘(E) new rural development investment

17 zone construction property.’’

18 (e) RECAPTURE.—Subsection (a) of section 50 (relat19 ing to certain dispositions, etc., of investment credit prop20 erty) is amended by adding at the end thereof the follow21 ing new paragraph:

22 ‘‘(6) SPECIAL RULES FOR NEW RURAL DEVEL23 OPMENT INVESTMENT ZONE CONSTRUCTION PROP24 ERTY.—
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1 ‘‘(A) IN GENERAL.—If, during any taxable

2 year, property with respect to which the tax3 payer claimed a rural development investment

4 zone credit is disposed of, the tax under this

5 chapter for such taxable year shall be increased

6 by the amount described in subparagraph (B).

7 ‘‘(B) AMOUNT OF INCREASE.—The in8 crease in tax under subparagraph (A) shall

9 equal the aggregate decrease in the credits al10 lowed under section 38 by reason of section

11 46(4) for all prior taxable years which would

12 have resulted solely from reducing the expendi13 tures taken into account with respect to the

14 property by an amount which bears the same

15 ratio to such expenditures as the number of

16 taxable years that the property was held by the

17 taxpayer bears to the applicable recovery period

18 under section 168(g).’’

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

20 this section shall apply to periods after December 31,

21 1992, under rules similar to the rules of section 48(m)

22 of the Internal Revenue Code of 1986 (as in effect before

23 its repeal by the Revenue Reconciliation Act of 1990).
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1 Subtitle C—Rural Development

2 Investment Zone Bonds

3 SEC. 221. RURAL DEVELOPMENT INVESTMENT ZONE

4 BONDS.

5 Subsection (a) of section 144 (relating to qualified

6 small issue bonds) is amended by adding at the end there7 of the following new paragraph:

8 ‘‘(13) RURAL DEVELOPMENT INVESTMENT

9 ZONE BONDS.—

10 ‘‘(A) IN GENERAL.—Paragraph (12) shall

11 not apply to any rural development investment

12 zone bond.

13 ‘‘(B) RURAL DEVELOPMENT INVESTMENT

14 ZONE BOND.—For purposes of subparagraph

15 (A), the term ‘rural development investment

16 zone bond’ means any bond issued as part of an

17 issue if—

18 ‘‘(i) such bond is a qualified small

19 issue bond (determined without regard to

20 paragraphs (8)(A) and (12)),

21 ‘‘(ii) 95 percent or more of the net

22 proceeds of the issue are to provide facili23 ties in a rural development investment

24 zone, and
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1 ‘‘(iii) the issue meets the requirements

2 of subparagraphs (C), (D), and (E).

3 ‘‘(C) PERIOD TO SPEND PROCEEDS.—

4 ‘‘(i) GENERAL RULE.—An issue meets

5 the requirements of this subparagraph only

6 if the proceeds are spent for the govern7 mental purposes of the issue within 18

8 months after the date of the issuance of

9 the bond.

10 ‘‘(ii) EXCEPTION.—Clause (i) shall

11 not apply to any issue if—

12 ‘‘(I) the issuer pays a penalty

13 equal to 3 percent of the amount of

14 available proceeds of the issue which

15 is not spent for the governmental pur16 poses of the issue as of the close of

17 such 18-month period, and

18 ‘‘(II) the issuer redeems such

19 bond not later than 24 months after

20 the date of the issuance of the bond.

21 ‘‘(D) ACQUISITION OF LAND NOT PER22 MITTED.—An issue meets the requirements of

23 this subparagraph only if no portion of the pro24 ceeds of the issue is used to acquire land (or

25 any interest therein).
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1 ‘‘(E) REPAYMENTS; EFFECTIVE RATE OF

2 INTEREST ON LOANS.—

3 ‘‘(i) IN GENERAL.—An issue meets

4 the requirements of this subparagraph only

5 if, with respect to loans financed by such

6 issue—

7 ‘‘(I) repayments of principal are

8 used not later than the close of the

9 1st semiannual period beginning after

10 the date the repayment is received to

11 redeem bonds which are part of such

12 issue, and

13 ‘‘(II) the effective rate of interest

14 does not exceed the yield on the issue

15 by more than 0.125 percentage points.

16 In determining the effective rate of interest

17 for purposes of subclause (II), there shall

18 be taken into account all fees, charges, and

19 other amounts (other than amounts for

20 any credit report) borne by the borrower

21 which are attributable to the loan or the

22 bond issue.

23 ‘‘(ii) DE MINIMIS REDEMPTIONS NOT

24 REQUIRED.—Clause (i) shall not be con25 strued to require amounts of less than
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1 $250,000 to be used to redeem bonds. The

2 Secretary may by regulation treat related

3 issues as 1 issue for purposes of the pre4 ceding sentence.

5 ‘‘(F) PENALTY.—

6 ‘‘(i) IN GENERAL.—In the case of

7 property with respect to which financing

8 was provided under this paragraph, if, at

9 any time during the 10-year period begin10 ning on the date such financing was pro11 vided, substantially all of the use of such

12 property ceases to be in a rural develop13 ment investment zone, there is hereby im14 posed on the trade or business to which

15 such financing was provided a penalty

16 equal to 1.25 percent of so much of the

17 face amount of all financing provided

18 (whether or not from the same issue and

19 whether or not such issue is outstanding)

20 before such cessation to the trade or busi21 ness using such property.

22 ‘‘(ii) NO PENALTY BY REASON OF

23 ZONE TERMINATION.—No penalty shall be

24 imposed under clause (i) solely by reason
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1 of the termination or revocation of a tax

2 enterprise zone designation.

3 ‘‘(iii) EXCEPTION FOR BANK4 RUPTCY.—Clause (i) shall not apply to any

5 cessation resulting from bankruptcy.’’.

6 TITLE III—ESTABLISHMENT OF

7 FOREIGN-TRADE ZONES IN

8 RURAL DEVELOPMENT IN9 VESTMENT ZONES

10 SEC. 301. FOREIGN-TRADE ZONE PREFERENCES.

11 (a) PREFERENCE IN ESTABLISHMENT OF FOREIGN12 TRADE ZONES IN REVITALIZATION AREAS.—In process13 ing applications for the establishment of foreign-trade

14 zones pursuant to an Act entitled ‘‘To provide for the es15 tablishment, operation, and maintenance of foreign-trade

16 zones in ports of entry of the United States, to expedite

17 and encourage foreign commerce, and for other purposes’’,

18 approved June 18, 1934 (48 Stat. 998), the Foreign19 Trade Zone Board shall consider on a priority basis and

20 expedite, to the maximum extent possible, the processing

21 of any application involving the establishment of a foreign22 trade zone within a rural development investment zone

23 designated pursuant to section 7881 of the Internal Reve24 nue Code of 1986.
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1 (b) APPLICATION PROCEDURE.—In processing appli2 cations for the establishment of ports of entry pursuant

3 to an Act entitled ‘‘An Act making appropriations for sun4 dry civil expenses of the Government for the fiscal year

5 ending June thirtieth, nineteen hundred and fifteen, and

6 for other purposes’’, approved August 1, 1914 (38 Stat.

7 609), the Secretary of the Treasury shall consider on a

8 priority basis and expedite, to the maximum extent pos9 sible, the processing of any application involving the estab10 lishment of a port of entry which is necessary to permit

11 the establishment of a foreign-trade zone within a rural

12 development investment zone (as so designated).

13 (c) APPLICATION EVALUATION.—In evaluating appli14 cations for the establishment of foreign-trade zones and

15 ports of entry in connection with rural development invest16 ment zones (as so designated), the Foreign-Trade Zone

17 Board and the Secretary of the Treasury shall approve

18 the applications to the maximum extent practicable, con19 sistent with their respective statutory responsibilities.
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1 TITLE IV—RESPONSIBILITIES OF

2 FEDERAL AGENCIES IN

3 RURAL DEVELOPMENT IN4 VESTMENT ZONES; REGU5 LATORY FLEXIBILITY

6 SEC. 401. RESPONSIBILITIES OF FEDERAL AGENCIES IN

7 RURAL DEVELOPMENT INVESTMENT ZONES.

8 (a) IN GENERAL.—To the extent permitted by law

9 and consistent with its primary mission, each Federal

10 agency (as defined in section 551(1) of title 5, United

11 States Code) shall seek to provide special assistance to

12 rural development investment zones designated pursuant

13 to section 7881 of the Internal Revenue Code of 1986.

14 Such assistance may include, but is not limited to—

15 (1) expedited processing,

16 (2) priority funding,

17 (3) program set-asides, and

18 (4) provision of technical assistance in further19 ance of the purposes set forth in section 2 of this

20 Act.

21 (b) REGULATIONS.—The head of each Federal agen22 cy, after consultation with the Secretary of Agriculture

23 shall prescribe such regulations as may be necessary or

24 appropriate to carry out the purposes of this section.
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1 SEC. 402. DEFINITION OF SMALL ENTITIES IN RURAL DE2 VELOPMENT INVESTMENT ZONES FOR PUR3 POSES OF ANALYSIS OF REGULATORY FUNC4 TIONS.

5 Section 601 of title 5, United States Code, is

6 amended—

7 (1) by striking out ‘‘and’’ at the end of para8 graph (5); and

9 (2) by striking out paragraph (6) and inserting

10 in lieu thereof the following:

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

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

13 or small governmental jurisdiction within the

14 meaning of paragraphs (3), (4), and (5) of this

15 section, respectively; and

16 ‘‘(B) any qualified rural development in17 vestment zone business; any governments which

18 designated and approved an area which has

19 been designated as a rural development invest20 ment zone (within the meaning of section 7881

21 of the Internal Revenue Code of 1986) to the

22 extent any rule pertains to the carrying out of

23 projects, activities, or undertakings within such

24 zone; and any not-for-profit development invest25 ment carrying out a significant portion of its

26 activities within such a zone; and
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1 ‘‘(7) the term ‘qualified rural development in2 vestment zone business’ means any person, corpora3 tion, or other entity—

4 ‘‘(A) which is engaged in the active con5 duct of a trade or business within a rural devel6 opment investment zone (within the meaning of

7 section 7881 of the Internal Revenue Code of

8 1986); and

9 ‘‘(B) for whom at least 50 percent of its

10 employees are qualified employees (within the

11 meaning of section 30A(e) of such Code).’’

12 SEC. 403. WAIVER OR MODIFICATION OF AGENCY RULES IN

13 RURAL DEVELOPMENT INVESTMENT ZONES.

14 (a) Chapter 6 of title 5, United States Code, is

15 amended by redesignating sections 611 and 612 as sec16 tions 612 and 613, respectively, and inserting the follow17 ing new section immediately after section 610:

18 ‘‘§ 611. Waiver or modification of agency rules in

19 rural development investment zones

20 ‘‘(a) Upon the written request of the governments

21 which designated and approved an area which has been

22 designated as a rural development investment zone under

23 section 7881 of the Internal Revenue Code of 1986, an

24 agency is authorized, in order to further the job creation,

25 community development, or economic revitalization objec-
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1 tives of the zone, to waive or modify all or part of any

2 rule which it has authority to promulgate, as such rule

3 pertains to the carrying out of projects, activities or un4 dertakings within the zone.

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, marital 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 rural development investment zone. If a request is made

17 to an agency other than the Department of the Treasury,

18 the requesting governments shall send a copy of the re19 quest to the Secretary of the Treasury at the time the

20 request is made.

21 ‘‘(d) In considering a request, the agency shall weigh

22 the extent to which the proposed change is likely to further

23 job creation, community development, or economic revital24 ization within the rural development investment zone

25 against the effect the change is likely to have on the un-
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1 derlying purposes of applicable statutes in the geographic

2 area which would be affected by the change. The agency

3 shall approve the request whenever it finds, in its discre4 tion, that the public interest which the proposed change

5 would serve in furthering such job creation, community

6 development, or economic revitalization outweighs the

7 public interest which continuation of the rule unchanged

8 would serve in furthering such underlying purposes. The

9 agency shall not approve any request to waive or modify

10 a rule if that waiver or modification would—

11 ‘‘(1) directly violate a statutory requirement

12 (including any requirement of the Fair Labor Stand13 ards Act of 1938 (52 Stat. 1060; 29 U.S.C. 201 et

14 seq.)); or

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

16 public health, including environmental health or

17 safety, such as a rule with respect to occupational

18 safety or health, or environmental pollution.

19 ‘‘(e) If a request is disapproved, the agency shall in20 form the requesting governments in writing of the reasons

21 therefor and shall, to the maximum extent possible, work

22 with such governments to develop an alternative, consist23 ent with the standards contained in subsection (d).

24 ‘‘(f) Agencies shall discharge their responsibilities

25 under this section in an expeditious manner, and shall
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1 make a determination on requests not later than 90 days

2 after their receipt.

3 ‘‘(g) A waiver or modification of a rule under sub4 section (a) shall not be considered to be a rule, rule5 making, or regulation under chapter 5 of this title. To fa6 cilitate reaching its decision on any requested waiver or

7 modification, the agency may seek the views of interested

8 parties and, if the views are to be sought, determine how

9 they should be obtained and to what extent, if any, they

10 should be taken into account in considering the request.

11 The agency shall publish a notice in the Federal Register

12 stating any waiver or modification of a rule under this

13 section.

14 ‘‘(h) In the event that an agency proposes to amend

15 a rule for which a waiver or modification under this sec16 tion is in effect, the agency shall not change the waiver

17 or modification to impose additional requirements unless

18 it determines, consistent with standards contained in sub19 section (d), that such action is necessary.

20 ‘‘(i) No waiver or modification of a rule under this

21 section shall remain in effect for a longer period than the

22 period for which the rural development investment zone

23 designation remains in effect for the area in which the

24 waiver or modification applies.
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1 ‘‘(j) For purposes of this section, the term ‘rule’

2 means (1) any rule as defined in section 551(4) of this

3 title or (2) any rulemaking conducted on the record after

4 opportunity for an agency hearing pursuant to sections

5 556 and 557 of this title.’’

6 (b) The table of sections for such chapter is amended

7 by redesignating the items relating to sections 611 and

8 612 as sections 612 and 613, respectively, and inserting

9 the following new item immediately after the item relating

10 to section 610:

‘‘611. Waiver or modification of agency rules in rural development

investment zones.’’

11 (c) Section 601(2) of such title is amended by insert12 ing ‘‘(except for purposes of section 611)’’ immediately be13 fore ‘‘means.’’.

14 (d) Section 613 of such title, as redesignated by sub15 section (a) of this section, is amended by—

16 (1) inserting ‘‘(except section 611)’’ imme17 diately after ‘‘chapter’’ in subsection (a); and

18 (2) inserting ‘‘as defined in section 601(2)’’ im19 mediately before the period at the end of the first

20 sentence of subsection (b).

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