I
106TH CONGRESS
1ST SESSION
H. R. 1967
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 26, 1999
Mr. SHOWS (for himself, Mr. THOMPSON of Mississippi, Mr. BARCIA, Mr.
BISHOP, Mr. BONIOR, Mr. BOUCHER, Mr. BROWN of Ohio, Mr. BOYD,
Mrs. CLAYTON, Ms. CARSON, Mr. CRAMER, Ms. DANNER, Mr. DUNCAN,
Mr. EVANS, Mr. GONZALEZ, Mr. GOODE, Mr. GREEN of Texas, Mr.
HALL
of Texas, Mr. HAYES, Mr. HILLIARD, Mr. HINCHEY, Mr.
HINOJOSA, Mr. HOLDEN, Mr. JOHN, Ms. KAPTUR, Mr. KLECZKA, Mr.
KUCINICH, Mr. LATOURETTE, Ms. LEE, Mr. LEWIS of Kentucky, Mr.
MCGOVERN, Mr. MCHUGH, Mr. MCINTYRE, Mrs. NAPOLITANO, Mr. NEY,
Mr. NORWOOD, Mr. PICKERING, Mr. REYES, Mr. RILEY, Ms. ROYBAL-
ALLARD, Ms. SANCHEZ, Mr. SANDLIN, Mr. TAYLOR of Mississppi, Mrs.
THURMAN, Mr. WHITFIELD, Mr. WISE, and Mr. WU) introduced the fol-
lowing 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 com-
mittee 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 Can-
ada or Mexico as a result of the North American Free
Trade Agreement.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘NAFTA Impact Relief
Act’’.
SEC. 2. DESIGNATION OF AND TAX INCENTIVES FOR
NAFTA-IMPACTED COMMUNITIES.
(a) IN GENERAL.—Chapter 1 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the
following new subchapter:
‘‘Subchapter X—NAFTA-Impacted
Communities
‘‘Sec. 1400E. Designation of NAFTA-impacted communities.
‘‘Sec. 1400F. NAFTA-impacted community employment credit.
‘‘Sec. 1400G. Increase in expensing under section 179.
‘‘Sec. 1400H. NAFTA-impacted community business defined.
‘‘SEC. 1400E. DESIGNATION OF NAFTA-IMPACTED COMMU-
NITIES.
‘‘(a) DESIGNATION.—
‘‘(1) 
NAFTA-IMPACTED
COMMUNITY.—For
purposes of this title, the term ‘NAFTA-impacted
community’ means any area—
‘‘(A) which is nominated by one or more
local governments and the State or States in
which it is located for designation as a commu-
nity impacted by the North American Free
Trade Agreement (hereinafter in this section re-
ferred to as a ‘nominated area’), and
‘‘(B) which the Secretary of Commerce
designates as a NAFTA-impacted community,
after consultation with—
‘‘(i) in the case of an area in a rural
area, the Secretary of Agriculture;
‘‘(ii) in the case of an area in an
urban area, the Secretary of Housing and
Urban Development; and
‘‘(iii) in the case of an area on an In-
dian reservation, the Secretary of the Inte-
rior.
‘‘(2) NUMBER
OF
DESIGNATIONS.—The Sec-
retary of Commerce may designate not more than
35 nominated areas as NAFTA-impacted commu-
nities.
‘‘(3) AREAS DESIGNATED BASED ON DEGREE
OF
LOSS
OF
JOBS
RESULTING
FROM
NAFTA,
ETC.—Except as otherwise provided in this section,
the nominated areas designated as NAFTA-im-
pacted communities under this subsection shall be
those nominated areas with the highest average
ranking with respect to the criteria described in sub-
section (c)(3). For purposes of the preceding sen-
tence, an area shall be ranked within each such cri-
terion on the basis of the amount by which the area
exceeds such criterion, with the area which exceeds
such criterion by the greatest amount given the
highest ranking.
‘‘(4) LIMITATION ON DESIGNATIONS.—
‘‘(A) PUBLICATION
OF
REGULATIONS.—
The Secretary of Commerce shall prescribe by
regulation no later than 4 months after the
date of the enactment of this section, after con-
sultation with the officials described in para-
graph (1)(B)—
‘‘(i) the procedures for nominating an
area under paragraph (1)(A),
‘‘(ii) the parameters relating to the
size and population characteristics of a
NAFTA-impacted community, and
‘‘(iii) the manner in which nominated
areas will be evaluated based on the cri-
teria specified in subsection (c).
‘‘(B) PROCEDURAL RULES.—The Secretary
of Commerce shall not make any designation of
a nominated area as a NAFTA-impacted com-
munity under paragraph (2) unless—
‘‘(i) a nomination regarding such area
is submitted in such a manner and in such
form, and contains such information, as
the Secretary of Commerce shall by regula-
tion prescribe, and
‘‘(ii) the Secretary of Commerce de-
termines that any information furnished is
reasonably accurate.
‘‘(5) NOMINATION PROCESS FOR INDIAN RES-
ERVATIONS.—For purposes of this subchapter, in
the case of a nominated area on an Indian reserva-
tion, the reservation governing body (as determined
by the Secretary of the Interior) shall be treated as
being both the State and local governments with re-
spect to such area.
‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EF-
FECT.—
‘‘(1) IN GENERAL.—Any designation of an area
as a NAFTA-impacted community shall remain in
effect during the period beginning on the date of the
designation and ending on the earliest of—
‘‘(A) December 31, 2006,
‘‘(B) the termination date designated by
the State and local governments in their nomi-
nation, or
‘‘(C) the date the Secretary of Commerce
revokes such designation.
‘‘(2) REVOCATION OF DESIGNATION.—The Sec-
retary of Commerce may revoke the designation
under this section of an area if the Secretary deter-
mines that the loss of jobs and other affects of
NAFTA on the area have been substantially allevi-
ated. Such determination shall include, at a min-
imum, a finding that the unemployment rate in the
area is equal to or lower than the national unem-
ployment rate, and a finding that new businesses are
being attracted to the area.
‘‘(c) AREA AND ELIGIBILITY REQUIREMENTS.—
‘‘(1) IN
GENERAL.—The Secretary of Com-
merce may designate a nominated area as a
NAFTA-impacted community under subsection (a)
only if the area meets the requirements of para-
graphs (2) and (3) of this subsection.
‘‘(2) AREA REQUIREMENTS.—For purposes of
paragraph (1), a nominated area meets the require-
ments of this paragraph if—
‘‘(A) the area is within the jurisdiction of
one or more local governments,
‘‘(B) the boundary of the area is contin-
uous, and
‘‘(C) the area does not include an em-
powerment zone (as defined in section 1393(b))
other than such a zone designated under section
1391(g).
‘‘(3) ELIGIBILITY REQUIREMENTS.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), a nominated area meets the require-
ments of this paragraph if the State and the
local governments in which it is located certify
(and the Secretary of Commerce, after such re-
view of Department of Labor data and other
appropriate supporting data as he deems appro-
priate, accepts such certification) that—
‘‘(i) the unemployment rate in the
area, as determined by the most recent
available data, was at least 1 percentage
point above the national unemployment
rate for the period to which such data re-
late, and
‘‘(ii) in the case of—
‘‘(I) a rural area, at least 300
workers who live or work in the area
have been certified as eligible to apply
for NAFTA transitional adjustment
assistance under subchapter D of
chapter 2 of title II of the Trade Act
of 1974 (19 U.S.C. 2341 et seq.), and
‘‘(II) an urban area, at least 500
workers have been so certified.
‘‘(B) RURAL
AREA
DEFINED.—For pur-
poses of this section, the term ‘rural area’
means an area—
‘‘(i) which is within a local govern-
ment jurisdiction or jurisdictions with a
population of less than 10,000,
‘‘(ii) which is outside of a metropoli-
tan statistical area (within the meaning of
section 143(k)(2)(B)), or
‘‘(iii) which is determined by the Sec-
retary of Commerce, after consultation
with the Secretary of Agriculture, to be a
rural area.
‘‘(C) URBAN
AREA
DEFINED.—For pur-
poses of this section, the term ‘urban area’
means any area that is not a rural area.
‘‘(d) COORDINATION WITH TREATMENT OF ENTER-
PRISE COMMUNITIES.—For purposes of this title, if there
are in effect with respect to the same area both—
‘‘(1) a designation as a NAFTA-impacted com-
munity, and
‘‘(2) a designation as an enterprise community,
both of such designations shall be given full effect with
respect to such area.
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this subchapter, rules similar to the rules of para-
graphs (5) and (7) of section 1393 shall apply.
‘‘SEC. 1400F. NAFTA-IMPACTED COMMUNITY EMPLOYMENT
CREDIT.
‘‘(a) AMOUNT OF CREDIT.—For purposes of section
38, the amount of the NAFTA-impacted community em-
ployment credit determined under this section with respect
to any employer for any taxable year is 8.5 percent of the
qualified NAFTA-impacted community wages paid or in-
curred during the calendar year which ends with or within
such taxable year.
‘‘(b) QUALIFIED
NAFTA-IMPACTED
COMMUNITY
WAGES.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified NAFTA-impacted commu-
nity wages’ means any wages paid or incurred by an
employer for services performed by an employee
while such employee is a qualified NAFTA-impacted
community employee.
‘‘(2) ONLY FIRST $15,000 OF WAGES PER YEAR
TAKEN INTO ACCOUNT.—With respect to each quali-
fied NAFTA-impacted community employee, the
amount of qualified NAFTA-impacted community
wages which may be taken into account for a cal-
endar year shall not exceed $15,000.
‘‘(3) COORDINATION WITH WORK OPPORTUNITY
CREDIT.—
‘‘(A) IN
GENERAL.—The term ‘qualified
NAFTA-impacted community wages’ shall not
include wages taken into account in deter-
mining the credit under section 51.
‘‘(B) COORDINATION
WITH
PARAGRAPH
(2).—The $15,000 amount in paragraph (2)
shall be reduced for any calendar year by the
amount of wages paid or incurred during such
year which are taken into account in deter-
mining the credit under section 51.
‘‘(c) QUALIFIED
NAFTA-IMPACTED
COMMUNITY
EMPLOYEE.—For purposes of this section—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the term ‘qualified NAFTA-
impacted community employee’ means, with respect
to any period, any employee of an employer if—
‘‘(A) substantially all of the services per-
formed during such period by such employee for
such employer are performed within a NAFTA-
impacted community in a trade or business of
the employer, and
‘‘(B) the principal place of abode of such
employee while performing such services is
within such NAFTA-impacted community.
‘‘(2) OTHER RULES.—Rules similar to the rules
of paragraphs (2) and (3) of section 1396(d) shall
apply.
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—
For purposes of this section, the rules of section 1397
shall apply.
‘‘SEC. 1400G. INCREASE IN EXPENSING UNDER SECTION 179.
‘‘(a) GENERAL RULE.—In the case of a NAFTA-im-
pacted community business (as defined in section 1400H),
for purposes of section 179—
‘‘(1) the limitation under section 179(b)(1)
shall be increased by the lesser of—
‘‘(A) $10,000, or
‘‘(B) the cost of section 179 property
which is qualified NAFTA-impacted property
placed in service during the taxable year, and
‘‘(2) the amount taken into account under sec-
tion 179(b)(2) with respect to any section 179 prop-
erty which is qualified NAFTA-impacted property
shall be 50 percent of the cost thereof.
‘‘(b) RECAPTURE.—Rules similar to the rules under
section 179(d)(10) shall apply with respect to any quali-
fied NAFTA-impacted property which ceases to be used
in a NAFTA-impacted community by a NAFTA-impacted
community business.
‘‘(c) QUALIFIED NAFTA-IMPACTED PROPERTY.—
For purposes of this section—
‘‘(1) 
IN
GENERAL.—The 
term 
‘qualified
NAFTA-impacted property’ means section 179 prop-
erty (as defined in section 179(d)) if—
‘‘(A) such property was acquired by the
taxpayer after December 31, 1999, and before
January 1, 2007, and
‘‘(B) such property would be qualified zone
property (as defined in section 1397C) if ref-
erences to NAFTA-impacted communities were
substituted for references to empowerment
zones in section 1397C.
‘‘(2) CERTAIN RULES TO APPLY.—The rules of
subsections (a)(2) and (b) of section 1397C shall
apply for purposes of this section.
‘‘SEC. 1400H. NAFTA-IMPACTED COMMUNITY BUSINESS
DEFINED.
‘‘For purposes of this part, the term ‘NAFTA-im-
pacted community business’ means any entity or propri-
etorship which would be a qualified business entity or
qualified proprietorship under section 1397B if references
to NAFTA-impacted communities were substituted for
references to empowerment zones in such section.
(b) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) NAFTA-IMPACTED
COMMUNITY
EMPLOY-
MENT CREDIT PART OF GENERAL BUSINESS CRED-
IT.—
(A) Subsection (b) of section 38 of such
Code (relating to current year business credit)
is amended by striking ‘‘plus’’ at the end of
paragraph (11), by striking the period at the
end of paragraph (12) and inserting ‘‘, plus’’,
and by adding at the end the following new
paragraph:
‘‘(13) the NAFTA-impacted community employ-
ment credit determined under section 1400F(a).’’.
(B) Subsection (d) of section 39 of such
Code (relating to carryback and carryforward of
unused credits) is amended by adding at the
end the following new paragraph:
‘‘(9) NO CARRYBACK OF SECTION 1400F CREDIT
BEFORE EFFECTIVE DATE.—No portion of the un-
used business credit for any taxable year which is
attributable to the credit determined under section
1400F (relating to NAFTA-impacted community
employment credit) may be carried to any taxable
year ending before January 1, 2000.’’.
(2) DENIAL OF DEDUCTION FOR PORTION OF
WAGES
EQUAL
TO NAFTA-IMPACTED
COMMUNITY
EMPLOYMENT CREDIT.—
(A) Subsection (a) of section 280C (relat-
ing to rule for employment credits) is amended
by striking ‘‘and 1396(a)’’ and inserting
‘‘1396(a), and 1400F(a)’’.
(B) Subsection (c) of section 196 (relating
to deduction for certain unused business cred-
its) is amended by striking ‘‘and’’ at the end of
paragraph (7), by striking the period at the end
of paragraph (8) and inserting ‘‘, and’’, and by
adding at the end the following new paragraph:
‘‘(9) the NAFTA-impacted community employ-
ment credit determined under section 1400F(a)’’.
(3) CARRYOVERS.—Subsection (c) of section
381 (relating to carryovers in certain corporate ac-
quisitions) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(27) NAFTA-IMPACTED
COMMUNITY
PROVI-
SIONS.—The acquiring corporation shall take into
account (to the extent proper to carry out the pur-
poses of this section and subchapter X, and under
such regulations as may be prescribed by the Sec-
retary) the items required to be taken into account
for purposes of subchapter X in respect of the dis-
tributor or transferor corporation.’’.
(c) CLERICAL AMENDMENTS.—The table of sub-
chapters for chapter 1 is amended by adding at the end
the following new item:
‘‘Subchapter X. NAFTA-Impacted Communities.’’
SEC. 3. GRANTS FOR JOB TRAINING ASSISTANCE FOR
NAFTA-IMPACTED COMMUNITIES.
(a) IN GENERAL.—The Secretary of Labor shall pro-
vide grants to States that contain NAFTA-impacted com-
munities, as designated under section 1400E of the Inter-
nal Revenue Code of 1986 (as added by section 2(a) of
this Act), for the purpose of providing sub-grants to non-
profit organizations and community or junior colleges in
order to provide short-term job training courses, courses
in entrepreneurism and self-employment, and other related
job training assistance that will promote the economic self-
sufficiency of individuals located in NAFTA-impacted
communities.
(b) MAXIMUM
AMOUNT
OF
GRANT.—The total
amount provided under a grant to a State under sub-
section (a) for a fiscal year may not exceed the product
of—
(1) $1,000,000; and
(2) the number of NAFTA-impacted commu-
nities located in the State.
(c) AUTHORIZATION OF APPROPRIATIONS.—
(1) IN GENERAL.—There are authorized to be
appropriated to carry out this section $35,000,000
for each of the fiscal years 2000 through 2006.
(2) AVAILABILITY.—Amounts appropriated pur-
suant to the authorization of appropriations under
paragraph (1) are authorized to remain available
until expended.
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