I

107TH CONGRESS

1ST SESSION H. R. 1819

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

MAY 10, 2001

Mr. SHOWS (for himself, Ms. BALDWIN, Mr. BARCIA, Mr. BONIOR, Mr. BOSWELL, Mr. BOUCHER, Mr. BOYD, Ms. BROWN of Florida, Mr. BROWN

of Ohio, Mr. BURR of North Carolina, Ms. CARSON of Indiana, Mrs.

CHRISTENSEN, Mrs. CLAYTON, Mr. CONDIT, Mr. CONYERS, Mr.

COSTELLO, Mr. CRAMER, Mr. DAVIS of Illinois, Mr. DEFAZIO, Mr.

EVANS, Mr. FILNER, Mr. FRANK, Mr. GILLMOR, Mr. GONZALEZ, Mr.

GOODE, Ms. HART, Mr. HINCHEY, Mr. HINOJOSA, Mr. HOLDEN, Mr.

JACKSON of Illinois, Ms. KAPTUR, Mr. KILDEE, Ms. KILPATRICK, Mr.

KUCINICH, Mr. LATOURETTE, Ms. LEE, Mr. LEWIS of Georgia, Ms.

MCCARTHY of Missouri, Mr. MCGOVERN, Mr. MCHUGH, Mr. MCINTYRE,

Ms. MCKINNEY, Ms. MILLENDER-MCDONALD, Mr. GEORGE MILLER of

California, Mr. MURTHA, Mr. NADLER, Mrs. NAPOLITANO, Mr. NEY, Mr.

NORWOOD, Mr. PALLONE, Mr. PICKERING, Mr. QUINN, Mr. REYES, Ms.

ROS-LEHTINEN, Ms. ROYBAL-ALLARD, Mr. SANDERS, Mr. STRICKLAND,

Mr. STUPAK, Mr. TAYLOR of Mississippi, Mr. THOMPSON of Mississippi,

Mrs. THURMAN, Mr. TURNER, Ms. VELA ́ZQUEZ, Mr. WHITFIELD, and

Ms. WOOLSEY) 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
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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 ‘‘Free Trade Commu5 nity Relief Act’’.

6 SEC. 2. DESIGNATION OF AND TAX INCENTIVES FOR

7 NAFTA-IMPACTED COMMUNITIES.

8 (a) IN GENERAL.—Chapter 1 of the Internal Rev9 enue Code of 1986 is amended by adding at the end the

10 following new subchapter:

11 ‘‘Subchapter XI—NAFTA-Impacted

12 Communities

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

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

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

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

13 ‘‘SEC. 1400K. DESIGNATION OF NAFTA-IMPACTED COMMU14 NITIES.

15 ‘‘(a) DESIGNATION.—

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

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

18 community’ means any area—

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

20 local governments and the State or States in
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1 which it is located for designation as a commu2 nity impacted by the North American Free

3 Trade Agreement (hereinafter in this section re4 ferred to as a ‘nominated area’), and

5 ‘‘(B) which the Secretary of Commerce

6 designates as a NAFTA-impacted community,

7 after consultation with—

8 ‘‘(i) in the case of an area in a rural

9 area, the Secretary of Agriculture;

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

11 urban area, the Secretary of Housing and

12 Urban Development; and

13 ‘‘(iii) in the case of an area on an In14 dian reservation, the Secretary of the Inte15 rior.

16 ‘‘(2) NUMBER OF DESIGNATIONS.—The Sec17 retary of Commerce may designate not more than

18 35 nominated areas as NAFTA-impacted commu19 nities.

20 ‘‘(3) AREAS DESIGNATED BASED ON DEGREE

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

22 Except as otherwise provided in this section, the

23 nominated areas designated as NAFTA-impacted

24 communities under this subsection shall be those

25 nominated areas with the highest average ranking
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1 with respect to the criteria described in subsection

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

3 area shall be ranked within each such criterion on

4 the basis of the amount by which the area exceeds

5 such criterion, with the area which exceeds such cri6 terion by the greatest amount given the highest

7 ranking.

8 ‘‘(4) LIMITATION ON DESIGNATIONS.—

9 ‘‘(A) PUBLICATION OF REGULATIONS.—

10 The Secretary of Commerce shall prescribe by

11 regulation no later than 4 months after the

12 date of the enactment of this section, after con13 sultation with the officials described in para14 graph (1)(B)—

15 ‘‘(i) the procedures for nominating an

16 area under paragraph (1)(A),

17 ‘‘(ii) the parameters relating to the

18 size and population characteristics of a

19 NAFTA-impacted community, and

20 ‘‘(iii) the manner in which nominated

21 areas will be evaluated based on the cri22 teria specified in subsection (c).

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

24 of Commerce shall not make any designation of
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1 a nominated area as a NAFTA-impacted com2 munity under paragraph (2) unless—

3 ‘‘(i) a nomination regarding such area

4 is submitted in such a manner and in such

5 form, and contains such information, as

6 the Secretary of Commerce shall by regula7 tion prescribe, and

8 ‘‘(ii) the Secretary of Commerce de9 termines that any information furnished is

10 reasonably accurate.

11 ‘‘(5) NOMINATION PROCESS FOR INDIAN RES12 ERVATIONS.—For purposes of this subchapter, in

13 the case of a nominated area on an Indian reserva14 tion, the reservation governing body (as determined

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

16 being both the State and local governments with re17 spect to such area.

18 ‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EF19 FECT.—

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

21 as a NAFTA-impacted community shall remain in

22 effect during the period beginning on the date of the

23 designation and ending on the earliest of—

24 ‘‘(A) December 31, 2008,
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1 ‘‘(B) the termination date designated by

2 the State and local governments in their nomi3 nation, or

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

5 revokes such designation.

6 ‘‘(2) REVOCATION OF DESIGNATION.—The Sec7 retary of Commerce may revoke the designation

8 under this section of an area if the Secretary deter9 mines that the loss of jobs and other affects of

10 NAFTA on the area have been substantially allevi11 ated. Such determination shall include, at a min12 imum, a finding that the unemployment rate in the

13 area is equal to or lower than the national unem14 ployment rate, and a finding that new businesses are

15 being attracted to the area.

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

17 ‘‘(1) IN GENERAL.—The Secretary of Com18 merce may designate a nominated area as a

19 NAFTA-impacted community under subsection (a)

20 only if the area meets the requirements of para21 graphs (2) and (3) of this subsection.

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

23 paragraph (1), a nominated area meets the require24 ments of this paragraph if—
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1 ‘‘(A) the area is within the jurisdiction of

2 one or more local governments,

3 ‘‘(B) the boundary of the area is contin4 uous,

5 ‘‘(C) the area does not include an em6 powerment zone (as defined in section 1393(b)),

7 and

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

9 community designated under section 1400E.

10 ‘‘(3) ELIGIBILITY REQUIREMENTS.—

11 ‘‘(A) IN GENERAL.—For purposes of para12 graph (1), a nominated area meets the require13 ments of this paragraph if the State and the

14 local governments in which it is located certify

15 (and the Secretary of Commerce, after such re16 view of Department of Labor data and other

17 appropriate supporting data as he deems appro18 priate, accepts such certification) that—

19 ‘‘(i) the unemployment rate in the

20 area, as determined by the most recent

21 available data, was at least 1 percentage

22 point above the national unemployment

23 rate for the period to which such data re24 late, and

25 ‘‘(ii) in the case of—
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1 ‘‘(I) a rural area, at least 300

2 workers who live or work in the area

3 have been certified as eligible to apply

4 for NAFTA transitional adjustment

5 assistance under subchapter D of

6 chapter 2 of title II of the Trade Act

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

8 ‘‘(II) an urban area, at least 500

9 workers have been so certified.

10 ‘‘(B) RURAL AREA DEFINED.—For pur11 poses of this section, the term ‘rural area’

12 means an area—

13 ‘‘(i) which is within a local govern14 ment jurisdiction or jurisdictions with a

15 population of less than 10,000,

16 ‘‘(ii) which is outside of a metropoli17 tan statistical area (within the meaning of

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

19 ‘‘(iii) which is determined by the Sec20 retary of Commerce, after consultation

21 with the Secretary of Agriculture, to be a

22 rural area.

23 ‘‘(C) URBAN AREA DEFINED.—For pur24 poses of this section, the term ‘urban area’

25 means any area that is not a rural area.
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1 ‘‘(d) COORDINATION WITH TREATMENT OF ENTER2 PRISE COMMUNITIES.—For purposes of this title, if there

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

4 ‘‘(1) a designation as a NAFTA-impacted com5 munity, and

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

7 both of such designations shall be given full effect with

8 respect to such area.

9 ‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur10 poses of this subchapter, rules similar to the rules of para11 graphs (5) and (7) of section 1393 shall apply.

12 ‘‘SEC. 1400L. NAFTA-IMPACTED COMMUNITY EMPLOYMENT

13 CREDIT.

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

15 38, the amount of the NAFTA-impacted community em16 ployment credit determined under this section with respect

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

18 qualified NAFTA-impacted community wages paid or in19 curred during the calendar year which ends with or within

20 such taxable year.

21 ‘‘(b) QUALIFIED NAFTA-IMPACTED COMMUNITY

22 WAGES.—

23 ‘‘(1) IN GENERAL.—For purposes of this sec24 tion, the term ‘qualified NAFTA-impacted commu25 nity wages’ means any wages paid or incurred by an
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1 employer for services performed by an employee

2 while such employee is a qualified NAFTA-impacted

3 community employee.

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

5 TAKEN INTO ACCOUNT.—With respect to each quali6 fied NAFTA-impacted community employee, the

7 amount of qualified NAFTA-impacted community

8 wages which may be taken into account for a cal9 endar year shall not exceed $15,000.

10 ‘‘(3) COORDINATION WITH WORK OPPORTUNITY

11 CREDIT.—

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

13 NAFTA-impacted community wages’ shall not

14 include wages taken into account in deter15 mining the credit under section 51.

16 ‘‘(B) COORDINATION WITH PARAGRAPH

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

18 shall be reduced for any calendar year by the

19 amount of wages paid or incurred during such

20 year which are taken into account in deter21 mining the credit under section 51.

22 ‘‘(c) QUALIFIED NAFTA-IMPACTED COMMUNITY

23 EMPLOYEE.—For purposes of this section—

24 ‘‘(1) IN GENERAL.—Except as otherwise pro25 vided in this subsection, the term ‘qualified NAFTA-
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1 impacted community employee’ means, with respect

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

3 ‘‘(A) substantially all of the services per4 formed during such period by such employee for

5 such employer are performed within a NAFTA6 impacted community in a trade or business of

7 the employer, and

8 ‘‘(B) the principal place of abode of such

9 employee while performing such services is

10 within such NAFTA-impacted community.

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

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

13 apply.

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

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

16 shall apply.

17 ‘‘SEC. 1400M. INCREASE IN EXPENSING UNDER SECTION

18 179.

19 ‘‘(a) GENERAL RULE.—In the case of a NAFTA-im20 pacted community business (as defined in section 1400N),

21 for purposes of section 179—

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

23 shall be increased by the lesser of—

24 ‘‘(A) $10,000, or
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1 ‘‘(B) the cost of section 179 property

2 which is qualified NAFTA-impacted property

3 placed in service during the taxable year, and

4 ‘‘(2) the amount taken into account under sec5 tion 179(b)(2) with respect to any section 179 prop6 erty which is qualified NAFTA-impacted property

7 shall be 50 percent of the cost thereof.

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

9 section 179(d)(10) shall apply with respect to any quali10 fied NAFTA-impacted property which ceases to be used

11 in a NAFTA-impacted community by a NAFTA-impacted

12 community business.

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

14 For purposes of this section—

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

16 NAFTA-impacted property’ means section 179 prop17 erty (as defined in section 179(d)) if—

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

19 taxpayer after December 31, 1999, and before

20 January 1, 2007, and

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

22 property (as defined in section 1397C) if ref23 erences to NAFTA-impacted communities were

24 substituted for references to empowerment

25 zones in section 1397C.
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1 ‘‘(2) CERTAIN RULES TO APPLY.—The rules of

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

3 apply for purposes of this section.

4 ‘‘SEC. 1400N. NAFTA-IMPACTED COMMUNITY BUSINESS DE5 FINED.

6 ‘‘For purposes of this part, the term ‘NAFTA-im7 pacted community business’ means any entity or propri8 etorship which would be a qualified business entity or

9 qualified proprietorship under section 1397C if references

10 to NAFTA-impacted communities were substituted for

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

12 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

13 (1) NAFTA-IMPACTED COMMUNITY EMPLOY14 MENT CREDIT PART OF GENERAL BUSINESS CRED15 IT.—

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

17 Code (relating to current year business credit)

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

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

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

21 and by adding at the end the following new

22 paragraph:

23 ‘‘(14) the NAFTA-impacted community employ24 ment credit determined under section 1400L(a).’’.
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1 (B) Subsection (d) of section 39 of such

2 Code (relating to carryback and carryforward of

3 unused credits) is amended by adding at the

4 end the following new paragraph:

5 ‘‘(10) NO CARRYBACK OF SECTION 1400L CRED6 IT BEFORE EFFECTIVE DATE.—No portion of the

7 unused business credit for any taxable year which is

8 attributable to the credit determined under section

9 1400L (relating to NAFTA-impacted community

10 employment credit) may be carried to any taxable

11 year ending before January 1, 2000.’’.

12 (2) DENIAL OF DEDUCTION FOR PORTION OF

13 WAGES EQUAL TO NAFTA-IMPACTED COMMUNITY

14 EMPLOYMENT CREDIT.—

15 (A) Subsection (a) of section 280C (relat16 ing to rule for employment credits) is amended

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

18 ‘‘1396(a), and 1400L(a)’’.

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

20 to deduction for certain unused business cred21 its) is amended by striking ‘‘and’’ at the end of

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

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

24 adding at the end the following new paragraph:
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1 ‘‘(10) the NAFTA-impacted community employ2 ment credit determined under section 1400L(a)’’.

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

4 381 (relating to carryovers in certain corporate ac5 quisitions) is amended by adding at the end the fol6 lowing new paragraph:

7 ‘‘(27) NAFTA-IMPACTED COMMUNITY PROVI8 SIONS.—The acquiring corporation shall take into

9 account (to the extent proper to carry out the pur10 poses of this section and subchapter XI, and under

11 such regulations as may be prescribed by the Sec12 retary) the items required to be taken into account

13 for purposes of subchapter XI in respect of the dis14 tributor or transferor corporation.’’.

15 (c) CLERICAL AMENDMENTS.—The table of sub16 chapters for chapter 1 is amended by adding at the end

17 the following new item:

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

18 SEC. 3. GRANTS FOR JOB TRAINING ASSISTANCE FOR

19 NAFTA-IMPACTED COMMUNITIES.

20 (a) IN GENERAL.—The Secretary of Labor shall pro21 vide grants to States that contain NAFTA-impacted com22 munities, as designated under section 1400K of the Inter23 nal Revenue Code of 1986 (as added by section 2(a) of

24 this Act), for the purpose of providing sub-grants to non25 profit organizations and community or junior colleges in
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1 order to provide short-term job training courses, courses

2 in entrepreneurism and self-employment, and other related

3 job training assistance that will promote the economic self4 sufficiency of individuals located in NAFTA-impacted

5 communities.

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

7 amount provided under a grant to a State under sub8 section (a) for a fiscal year may not exceed the product

9 of—

10 (1) $1,000,000; and

11 (2) the number of NAFTA-impacted commu12 nities located in the State.

13 (c) AUTHORIZATION OF APPROPRIATIONS.—

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

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

16 for each of the fiscal years 2002 through 2008.

17 (2) AVAILABILITY.—Amounts appropriated pur18 suant to the authorization of appropriations under

19 paragraph (1) are authorized to remain available

20 until expended.

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