< Back to H.R. 3241 (104th Congress, 1995–1996)

Text of the More Power for Empowerment Zones Act of 1996

This bill was introduced on April 15, 1996, in a previous session of Congress, but was not enacted. The text of the bill below is as of Apr 15, 1996 (Introduced).

Source: GPO

HR 3241 IH

104th CONGRESS

2d Session

H. R. 3241

To amend the Internal Revenue Code to allow the designation of additional empowerment zones and provide additional incentives for empowerment zones and enterprise communities, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

April 15, 1996

Mr. FOGLIETTA (for himself, Mr. BARRETT of Wisconsin, Mr. DELLUMS, Ms. EDDIE BERNICE JOHNSON of Texas, Mr. GENE GREEN of Texas, Mr. CLYBURN, Mr. HINCHEY, Ms. NORTON, Mr. HASTINGS of Florida, Miss COLLINS of Michigan, and Ms. MCKINNEY) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Banking and Financial Services, Government Reform and Oversight, Transportation and Infrastructure, Economic and Educational Opportunities, International Relations, Commerce, the Judiciary, National Security, and Small Business, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned


A BILL

To amend the Internal Revenue Code to allow the designation of additional empowerment zones and provide additional incentives for empowerment zones and enterprise communities, and for other purposes.

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) SHORT TITLE- This Act may be cited as the ‘More Power for Empowerment Zones Act of 1996’.

    (b) TABLE OF CONTENTS- The table of contents for this Act is as follows:

      Sec. 1. Short title and table of contents.

TITLE I--TAX TREATMENT OF EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES

Subtitle A--Designation of Additional Empowerment Zones

      Sec. 101. Designation of additional empowerment zones.

Subtitle B--Increased Incentives for Empowerments Zones and Enterprise Communities

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

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

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

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

      Sec. 115. Commercial revitalization tax credit.

Subtitle C--Brownfields Redevelopment Act

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

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

TITLE II--ASSISTANCE FOR INFRASTRUCTURE IMPROVEMENTS AND DEVELOPMENT

      Sec. 201. Loan guarantees.

      Sec. 202. Revolving fund for loans.

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

      Sec. 204. Eligible units of general local government.

      Sec. 205. Infrastructure activities.

      Sec. 206. Definitions.

      Sec. 207. Regulations.

TITLE III--ADDITIONAL BENEFITS FOR EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES

      Sec. 301. Education grants.

      Sec. 302. Minimum allocation of foreign assistance for purchase of certain United States goods.

      Sec. 303. Requirement for Federal government to procure 15 percent of goods and services from businesses located in empowerment zones and enterprise communities.

      Sec. 304. Requirement for Federal government to procure recycled materials from entities located in empowerment zones.

      Sec. 305. Get empowerment zones moving program.

TITLE IV--REGULATORY FLEXIBILITY

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

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

TITLE I--TAX TREATMENT OF EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES

Subtitle A--Designation of Additional Empowerment Zones

SEC. 101. DESIGNATION OF ADDITIONAL EMPOWERMENT ZONES.

    (a) IN GENERAL- Section 1391 of the Internal Revenue Code of 1986 (relating to designation procedure for empowerment zones and enterprise communities) is amended by adding at the end the following new subsection:

    ‘(g) DESIGNATIONS OF ADDITIONAL EMPOWERMENT ZONES-

      ‘(1) IN GENERAL- In addition to the areas designated under subsection (a), the appropriate Secretaries may designate in the aggregate an additional 9 nominated areas as empowerment zones under this section, subject to the availability of eligible nominated areas. Of that number, not more than 6 may be designated in urban areas and not more than 3 may be designated in rural areas.

      ‘(2) PERIOD DESIGNATIONS MAY BE MADE- Notwithstanding subsection (c), a designation may be made under this subsection in 1997 or 1998.’

    (b) APPLICATION OF EMPLOYMENT CREDIT TO NEW EMPOWERMENT ZONES- Subsection (b) of section 1396 of such Code (relating to empowerment zone employment credit) is amended--

      (1) by amending so much of the subsection as precedes the table to read as follows:

    ‘(b) APPLICABLE PERCENTAGE- For purposes of this section--

      ‘(1) IN GENERAL- Except as provided in paragraph (2), the term ‘applicable percentage’ means the percentage determined in accordance with the following table:’, and

      (2) by adding at the end the following new paragraph:

      ‘(2) APPLICATION TO EMPOWERMENT ZONES DESIGNATED UNDER SECTION 1391(g)- In the case of any empowerment zone designated under section 1391(g), the term ‘applicable percentage’ means the percentage determined in accordance with the following table:

‘In the case of wages paid or

--The applicable

incurred during calendar year:

--percentage is:

1997 through 2004

--20

2005

--15

2006

--10

2007

--5.’

    (c) CONFORMING AMENDMENT- Subsections (e) and (f) of section 1391 of such Code are each amended by striking ‘subsection (a)’ and inserting ‘this section’.

Subtitle B--Increased Incentives for Empowerments Zones and Enterprise Communities

SEC. 111. TREATMENT OF BONDS ISSUED BY GOVERNMENTS IN EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES.

    (a) ALLOWANCE OF FEDERAL GUARANTEES FOR CERTAIN TAX EXEMPT STATE AND LOCAL BONDS FOR EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES-

      (1) IN GENERAL- Paragraph (3) of section 149(b) of the Internal Revenue Code of 1986 (relating to Federally guaranteed bond is not tax exempt) is amended by adding at the end the following new paragraph:

        ‘(E) EXEMPT FACILITY BONDS- Paragraph (1) shall not apply to any exempt facility bond (as defined in section 1394).’

      (2) EFFECTIVE DATE- The amendment made by this subsection shall apply to bonds issued after the date of the enactment of this Act.

    (b) INCREASE IN LIMITATION ON TAX-EXEMPT ENTERPRISE ZONE FACILITY BONDS- Subparagraph (B) of section 1394(c)(1) of such Code (relating to tax-exempt enterprise zone facility bonds) is amended by striking ‘$20,000,000’ and inserting ‘$40,000,000’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to bonds issued after the date of the enactment of this Act.

SEC. 112. EXPANDED DEFINITION OF EMPOWERMENT ZONE FOR PURPOSES OF INCREASED EXPENSING.

    (a) IN GENERAL- Section 1397A of the Internal Revenue Code of 1986 (relating to increase in expensing under section 179) is amended by adding at the end the following new subsection:

    ‘(c) ENTERPRISE ZONE BUSINESS-

      ‘(1) IN GENERAL- For purposes of this section, the term ‘enterprise zone business’ has the meaning given such term by section 1397B, except that subsections (b)(6) and (c)(5) of section 1397B shall be applied by treating any empowerment zone as including the qualified surrounding area.

      ‘(2) QUALIFIED SURROUNDING AREA-

        ‘(A) IN GENERAL- For purposes of paragraph (1), the term ‘qualified surrounding area’ means, with respect to any empowerment zone (or any noncontiguous portion of such zone) the area of not more than 1 mile in radius which--

          ‘(i) surrounds and is contiguous with such zone (or such portion),

          ‘(ii) is designated for purposes of this paragraph by each State and local government which nominated such zone for designation under section 1391, and

          ‘(iii) meets the requirements of section 1392(a).

        ‘(B) EXPANSION TO 2-MILE RADIUS BY APPROPRIATE SECRETARY- Upon the request of each of the States and local governments referred to in subparagraph (A)(ii), the appropriate Secretary may increase the 1 mile distance under subparagraph (A) by not more than 1 additional mile. Such Secretary shall determine whether and by how much to increase such distance based on criteria published by such Secretary.’

    (b) EFFECTIVE DATE- The amendment made by this section shall apply to taxable years ending after the date of the enactment of this Act.

SEC. 113. ADDITIONAL EXPENSING FOR EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES.

    (a) IN GENERAL- Section 1397A of the Internal Revenue Code of 1986 (relating to increase in expensing under section 179) is amended--

      (1) in subparagraph (A) of subsection (a)(1), by striking ‘$20,000’ and inserting ‘$35,000’, and

      (2) by adding at the end the following new subsection:

    ‘(c) ENTERPRISE ZONE BUSINESS- For purposes of this section, the term ‘enterprise zone business’ has the meaning given such term by section 1397B, except that in applying such section references to empowerment zones shall be treated as including references to enterprise communities.’

    (b) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.

SEC. 114. ADDITIONAL INCENTIVES FOR EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES.

    (a) IN GENERAL- Subchapter U of chapter 1 of the Internal Revenue Code of 1986 (relating to designation and treatment of empowerment zones, enterprise communities, and rural development investment areas) is amended--

      (1) by redesignating part IV as part V,

      (2) by redesignating section 1397D as section 1397F, and

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

‘PART IV--ADDITIONAL INCENTIVES FOR EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES

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

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

‘SEC. 1397D. EMPOWERMENT ZONE AND ENTERPRISE COMMUNITY CAPITAL GAIN.

    ‘(a) GENERAL RULE- Gross income does not include any qualified capital gain recognized by a qualified taxpayer on the sale or exchange of a qualified zone asset held for more than 5 years.

    ‘(b) QUALIFIED ZONE ASSET- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘qualified zone asset’ means--

        ‘(A) any qualified zone stock,

        ‘(B) any qualified zone business property, and

        ‘(C) any qualified zone partnership interest.

      ‘(2) QUALIFIED ZONE STOCK-

        ‘(A) IN GENERAL- Except as provided in subparagraph (B), the term ‘qualified zone stock’ means any stock in a domestic corporation if--

          ‘(i) such stock is acquired by the taxpayer on original issue from the corporation solely in exchange for cash,

          ‘(ii) as of the time such stock was issued, such corporation was an enterprise zone business (or, in the case of a new corporation, such corporation was being organized for purposes of being an enterprise zone business), and

          ‘(iii) during substantially all of the taxpayer’s holding period for such stock, such corporation qualified as an enterprise zone business.

        ‘(B) EXCLUSION OF STOCK FOR WHICH DEDUCTION UNDER SECTION 1397E ALLOWED- The term ‘qualified zone stock’ shall not include any stock the basis of which is reduced under section 1397E.

        ‘(C) REDEMPTIONS- The term ‘qualified zone stock’ shall not include any stock acquired from a corporation which made a substantial

stock redemption or distribution (without a bona fide business purpose therefor) in an attempt to avoid the purposes of this section.

      ‘(3) QUALIFIED ZONE BUSINESS PROPERTY-

        ‘(A) IN GENERAL- The term ‘qualified zone business property’ means tangible property if--

          ‘(i) such property was acquired by the taxpayer by purchase (as defined in section 179(d)(2)) after the date on which the designation of the empowerment zone or enterprise community took effect,

          ‘(ii) the original use of such property in the empowerment zone or enterprise community commences with the taxpayer, and

          ‘(iii) during substantially all of the taxpayer’s holding period for such property, substantially all of the use of such property was in an enterprise zone business of the taxpayer.

        ‘(B) SPECIAL RULE FOR SUBSTANTIAL IMPROVEMENTS-

          ‘(i) IN GENERAL- The requirements of clauses (i) and (ii) of subparagraph (A) shall be treated as satisfied with respect to--

            ‘(I) property which is substantially improved by the taxpayer, and

            ‘(II) any land on which such property is located.

          ‘(ii) SUBSTANTIAL IMPROVEMENT- For purposes of clause (i), property shall be treated as substantially improved by the taxpayer if, during any 24-month period beginning after the date on which the designation of the empowerment zone or enterprise community took effect, additions to basis with respect to such property in the hands of the taxpayer exceed the greater of--

            ‘(I) an amount equal to the adjusted basis at the beginning of such 24-month period in the hands of the taxpayer, or

            ‘(II) $5,000.

        ‘(C) LIMITATION ON LAND- The term ‘qualified zone business property’ shall not include land which is not an integral part of an enterprise zone business.

      ‘(4) QUALIFIED ZONE PARTNERSHIP INTEREST- The term ‘qualified zone partnership interest’ means any interest in a partnership if--

        ‘(A) such interest is acquired by the taxpayer from the partnership solely in exchange for cash,

        ‘(B) as of the time such interest was acquired, such partnership was an enterprise zone business (or, in the case of a new partnership, such partnership was being organized for purposes of being an enterprise zone business), and

        ‘(C) during substantially all of the taxpayer’s holding period for such interest, such partnership qualified as an enterprise zone business.

      A rule similar to the rule of paragraph (2)(C) shall apply for purposes of this paragraph.

      ‘(5) TREATMENT OF SUBSEQUENT PURCHASERS- The term ‘qualified zone asset’ includes any property which would be a qualified zone asset but for paragraph (2)(A)(i), (3)(A)(ii), or (4)(A) in the hands of the taxpayer if such property was a qualified zone asset in the hands of all prior holders.

      ‘(6) 10-YEAR SAFE HARBOR- If any property ceases to be a qualified zone asset by reason of paragraph (2)(A)(iii), (3)(A)(iii), or (4)(C) after the 10-year period beginning on the date the taxpayer acquired such property, such property shall continue to be treated as meeting the requirements of such paragraph; except that the amount of gain to which subsection (a) applies on any sale or exchange of such property shall not exceed the amount which would be qualified capital gain had such property been sold on the date of such cessation.

      ‘(7) TREATMENT OF ZONE TERMINATIONS- The termination of any designation of an area as an empowerment zone or enterprise community shall be disregarded for purposes of determining whether any property is a qualified zone asset.

    ‘(c) OTHER DEFINITIONS AND SPECIAL RULES- For purposes of this section--

      ‘(1) QUALIFIED CAPITAL GAIN- Except as otherwise provided in this subsection, the term ‘qualified capital gain’ means any long-term capital gain recognized on the sale or exchange of a qualified zone asset held for more than 5 years.

      ‘(2) CERTAIN GAIN ON REAL PROPERTY NOT QUALIFIED- The term ‘qualified capital gain’ shall not include any gain which would be treated as ordinary income under section 1250 if section 1250 applied to all depreciation rather than the additional depreciation.

      ‘(3) GAIN ATTRIBUTABLE TO PERIODS AFTER TERMINATION OF ZONE DESIGNATION NOT QUALIFIED- The term ‘qualified capital gain’ shall not include any gain attributable to periods after the termination of any designation of an area as an empowerment zone or enterprise community.

      ‘(4) RELATED PARTY TRANSACTIONS- The term ‘qualified capital gain’ shall not include any gain attributable, directly or indirectly, in whole or in part, to a transaction with a related person.

      ‘(5) QUALIFIED TAXPAYER- The term ‘qualified taxpayer’ means any taxpayer if the amount invested by the taxpayer in infrastructure activities (as defined in section 205 of the More Power for Empowerment Zones Act of 1996, as in effect immediately after the enactment of this section) in any empowerment zone or enterprise community during the taxable year is equal to 50 percent or more of the qualified capital gain recognized in such taxable year.

      ‘(6) ENTERPRISE ZONE BUSINESS- The term ‘enterprise zone business’ has the meaning given such term by section 1394(b)(3), except that, in

applying section 1394(b)(3), the term ‘qualified business’ shall not include any trade or business of producing property of a character subject to the allowance for depletion under section 611.

    ‘(d) TREATMENT OF PASS-THRU ENTITIES-

      ‘(1) SALES AND EXCHANGES- Gain on the sale or exchange of an interest in a pass-thru entity held by the taxpayer (other than an interest in an entity which was an enterprise zone business during substantially all of the period the taxpayer held such interest) for more than 5 years shall be treated as gain described in subsection (a) to the extent such gain is attributable to amounts which would be qualified capital gain on qualified zone assets (determined as if such assets had been sold on the date of the sale or exchange) held by such entity for more than 5 years and throughout the period the taxpayer held such interest. A rule similar to the rule of paragraph (2)(C) shall apply for purposes of the preceding sentence.

      ‘(2) INCOME INCLUSIONS-

        ‘(A) IN GENERAL- Any amount included in income by reason of holding an interest in a pass-thru entity (other than an entity which was an enterprise zone business during substantially all of the period the taxpayer held the interest to which such inclusion relates) shall be treated as gain described in subsection (a) if such amount meets the requirements of subparagraph (B).

        ‘(B) REQUIREMENTS- An amount meets the requirements of this subparagraph if--

          ‘(i) such amount is attributable to qualified capital gain recognized on the sale or exchange by the pass-thru entity of property which is a qualified zone asset in the hands of such entity and which was held by such entity for the period required under subsection (a), and

          ‘(ii) such amount is includible in the gross income of the taxpayer by reason of the holding of an interest in such entity which was held by the taxpayer on the date on which such pass-thru entity acquired such asset and at all times thereafter before the disposition of such asset by such pass-thru entity.

        ‘(C) LIMITATION BASED ON INTEREST ORIGINALLY HELD BY TAXPAYER- Subparagraph (A) shall not apply to any amount to the extent such amount exceeds the amount to which subparagraph (A) would have applied if such amount were determined by reference to the interest the taxpayer held in the pass-thru entity on the date the qualified zone asset was acquired.

      ‘(3) PASS-THRU ENTITY- For purposes of this subsection, the term ‘pass-thru entity’ means--

        ‘(A) any partnership,

        ‘(B) any S corporation,

        ‘(C) any regulated investment company, and

        ‘(D) any common trust fund.

    ‘(e) SALES AND EXCHANGES OF INTERESTS IN PARTNERSHIPS AND S CORPORATIONS WHICH ARE QUALIFIED ZONE BUSINESSES- In the case of the sale or exchange of an interest in a partnership, or of stock in an S corporation, which was an enterprise zone business during substantially all of the period the taxpayer held such interest or stock, the amount of qualified capital gain shall be determined without regard to--

      ‘(1) any intangible, and any land, which is not an integral part of any qualified business (as defined in section 1397B(d) except that references to

empowerment zones shall be treated as including references to enterprise communities), and

      ‘(2) gain attributable to periods before the designation of an area as an empowerment zone or enterprise community.

    ‘(f) CERTAIN TAX-FREE AND OTHER TRANSFERS- For purposes of this section--

      ‘(1) IN GENERAL- In the case of a transfer of a qualified zone asset to which this subsection applies, the transferee shall be treated as--

        ‘(A) having acquired such asset in the same manner as the transferor, and

        ‘(B) having held such asset during any continuous period immediately preceding the transfer during which it was held (or treated as held under this subsection) by the transferor.

      ‘(2) TRANSFERS TO WHICH SUBSECTION APPLIES- This subsection shall apply to any transfer--

        ‘(A) by gift,

        ‘(B) at death, or

        ‘(C) from a partnership to a partner thereof of a qualified zone asset with respect to which the requirements of subsection (d)(2) are met at the time of the transfer (without regard to the 5-year holding requirement).

      ‘(3) CERTAIN RULES MADE APPLICABLE- Rules similar to the rules of section 1244(d)(2) shall apply for purposes of this section.

‘SEC. 1397E. EMPOWERMENT ZONE AND ENTERPRISE COMMUNITY STOCK.

    ‘(a) GENERAL RULE- At the election of any individual, the aggregate amount paid by such taxpayer during the taxable year for the purchase of enterprise zone stock on the original issue of such stock by a qualified issuer shall be allowed as a deduction.

    ‘(b) Limitations-

      ‘(1) CEILING-

        ‘(A) IN GENERAL- The maximum amount allowed as a deduction under subsection (a) to a taxpayer shall not exceed--

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

          ‘(ii) when added to the aggregate amount allowed as a deduction under this section in all prior years, $500,000.

        ‘(B) EXCESS AMOUNTS- If the amount otherwise deductible by any person under subsection (a) exceeds the limitation under--

          ‘(i) subparagraph (A)(i), the amount of such excess shall be treated as an amount paid in the next taxable year, and

          ‘(ii) subparagraph (A), the deduction allowed for any taxable year shall be allocated proportionately among the enterprise zone stock purchased by such person on the basis of the respective purchase prices per share.

      ‘(2) RELATED PERSON- The taxpayer and members of the taxpayer’s family shall be treated as one person for purposes of paragraph (1) and the limitations contained in such paragraph shall be allocated among the taxpayer and such members in accordance with their respective purchases of enterprise zone stock. For purposes of this paragraph, an individual’s family includes only such individual’s spouse and minor children.

      ‘(3) PARTIAL TAXABLE YEAR- If designation of an area as an empowerment zone or enterprise community occurs, expires, or is revoked pursuant to section 1391 on a date other than the first or last day of the taxable year of the taxpayer, or in the case of a short taxable year, the limitations specified in paragraph (1) shall be adjusted on a pro rata basis (based upon the number of days).

    ‘(c) ENTERPRISE ZONE STOCK- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘enterprise zone stock’ means stock of a corporation if--

        ‘(A) such stock is acquired on original issue from the corporation, and

        ‘(B) such corporation is, at the time of issue, a qualified enterprise zone issuer.

      ‘(2) PROCEEDS MUST BE INVESTED IN QUALIFIED ENTERPRISE ZONE PROPERTY-

        ‘(A) IN GENERAL- Such term shall include such stock only to the extent that the proceeds of such issuance are used by such issuer during the 12-month period beginning on the date of issuance to purchase (as defined in section 179(d)(2)) qualified enterprise zone property.

        ‘(B) QUALIFIED ENTERPRISE ZONE PROPERTY- For purposes of this section, the term ‘qualified enterprise zone property’ means property to which section 168 applies (or would apply but for section 179)--

          ‘(i) the original use of which commences in an empowerment zone or enterprise community with the issuer, and

          ‘(ii) substantially all of the use of which is in such empowerment zone or enterprise community.

      ‘(3) REDEMPTIONS- The term ‘enterprise zone stock’ shall not include any stock acquired from a corporation which made a substantial stock redemption or distribution (without a bona fide business purpose therefor) in an attempt to avoid the purposes of this section.

    ‘(d) QUALIFIED ENTERPRISE ZONE ISSUER- For purposes of this section, the term ‘qualified enterprise zone issuer’ means any domestic C corporation if--

      ‘(1) such corporation is a corporation described in section 1397B(b) (except that in applying such section any references to an empowerment zone shall be treated as including a reference to an enterprise community) or, in the case of a new corporation, such corporation is being organized for purposes of being such a corporation,

      ‘(2) such corporation does not have more than one class of stock,

      ‘(3) the sum of--

        ‘(A) the money,

        ‘(B) the aggregate unadjusted bases of property owned by such corporation, and

        ‘(C) the value of property leased to the corporation (as determined under regulations prescribed by the Secretary),

      does not exceed $50,000,000, and

      ‘(4) more than 20 percent of the total voting power, and 20 percent of the total value, of the stock of such corporation is owned directly by individuals or estates or indirectly by individuals through partnerships or trusts.

    The determination under paragraph (3) shall be made as of the time of issuance of the stock in question but shall include amounts received for such stock.

    ‘(e) DISPOSITIONS OF STOCK-

      ‘(1) BASIS REDUCTION- For purposes of this title, the basis of any enterprise zone stock shall be reduced by the amount of the deduction allowed under this section with respect to such stock.

      ‘(2) DEDUCTION RECAPTURED AS ORDINARY INCOME- For purposes of section 1245--

        ‘(A) any stock the basis of which is reduced under paragraph (1) (and any other property the basis of which is determined in whole or in part by reference to the adjusted basis of such stock) shall be treated as section 1245 property, and

        ‘(B) any reduction under paragraph (1) shall be treated as a deduction allowed for depreciation.

      If an exchange of any stock described in paragraph (1) qualifies under section 354(a), 355(a), or 356(a), the amount of gain recognized under section 1245 by reason of this paragraph shall not exceed the amount of gain recognized in the exchange (determined without regard to this paragraph).

      ‘(3) CERTAIN EVENTS TREATED AS DISPOSITIONS- For purposes of determining the amount treated as ordinary income under section 1245 by reason of paragraph (2), paragraph (3) of section 1245(b) (relating to certain tax-free transactions) shall not apply.

      ‘(4) INTEREST CHARGED IF DISPOSITION WITHIN 5 YEARS OF PURCHASE-

        ‘(A) IN GENERAL- If--

          ‘(i) a taxpayer disposes of any enterprise zone stock with respect to which a deduction was allowed under subsection (a) (or any other property the basis of which is determined in whole or in part by reference to the adjusted basis of such stock) before the end of the 5-year period beginning on the date such stock was purchased by the taxpayer, and

          ‘(ii) section 1245(a) applies to such disposition by reason of paragraph (2),

        then the tax imposed by this chapter for the taxable year in which such disposition occurs shall be increased by the amount determined under subparagraph (B).

        ‘(B) ADDITIONAL AMOUNT- For purposes of subparagraph (A), the additional amount shall be equal to the amount of interest (determined at the rate applicable under section 6621(a)(2)) that would accrue--

          ‘(i) during the period beginning on the date the stock was purchased by the taxpayer and ending on the date of such disposition by the taxpayer, and

          ‘(ii) on an amount equal to the aggregate decrease in tax of the taxpayer resulting from the deduction allowed under this subsection (a) with respect to such stock.

        ‘(C) SPECIAL RULE- Any increase in tax under subparagraph (A) shall not be treated as a tax imposed by this chapter for purposes of--

          ‘(i) determining the amount of any credit allowable under this chapter, and

          ‘(ii) determining the amount of the tax imposed by section 55.

    ‘(f) DISQUALIFICATION-

      ‘(1) ISSUER CEASES TO QUALIFY- If, during the 10-year period beginning on the date enterprise zone stock was purchased by the taxpayer, the issuer of such stock ceases to be a qualified enterprise zone issuer (determined without regard to subsection (d)(3)), then notwithstanding any provision of this subtitle other than paragraph (2), the taxpayer shall be treated for purposes of subsection (e) as disposing of such stock (and any other property the basis of which is determined in whole or in part by reference to the adjusted basis of such stock) during the taxable year during which such cessation occurs at its fair market value as of the 1st day of such taxable year.

      ‘(2) CESSATION OF ENTERPRISE ZONE STATUS NOT TO CAUSE RECAPTURE- A corporation shall not fail to be treated as a qualified enterprise zone issuer for purposes of paragraph (1) solely by reason of the termination or revocation of a designation as an empowerment zone or enterprise community, as the case may be.

    ‘(g) OTHER SPECIAL RULES-

      ‘(1) APPLICATION OF LIMITS TO PARTNERSHIPS AND S CORPORATIONS- In the case of a partnership or an S corporation, the limitations under subsection (b) shall apply at the partner and shareholder level and shall not apply at the partnership or corporation level.

      ‘(2) DEDUCTION NOT ALLOWED TO ESTATES AND TRUSTS- Estates and trusts shall not be treated as individuals for purposes of this section.’

    (b) TECHNICAL AMENDMENT- Subsection (a) of section 1016 of such Code (relating to adjustments to basis) is amended by striking ‘and’ at the end of paragraph (24), by striking the period at the end of paragraph (25) and inserting ‘, and’; and by adding at the end the following new paragraph:

      ‘(26) to the extent provided in section 1397E(e), in the case of stock with respect to which a deduction was allowed or allowable under section 1397E(a).’

    (c) CLERICAL AND CONFORMING AMENDMENTS-

      (1) The table of parts for subchapter U of such Code is amended by striking the item relating to part IV and inserting the following new items:

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

‘Part V. Regulations.’

      (2) The table of sections for part V of subchapter U of chapter 1 of such Code, as redesignated by this section, is amended by redesignating the item relating to section 1397D as section 1397F.

      (3) Section 1397F of such Code, as so redesignated, is amended by striking ‘and III’ each place it appears and inserting ‘, III, and IV’.

    (d) EFFECTIVE DATE- The amendments made by this section apply to taxable years ending after the date of the enactment of this Act.

SEC. 115. COMMERCIAL REVITALIZATION TAX CREDIT.

    (a) ALLOWANCE OF CREDIT- Section 46 of the Internal Revenue Code of 1986 (relating to investment credit) is amended by striking ‘and’ at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting ‘, and’, and by adding at the end the following new paragraph:

      ‘(4) the commercial revitalization credit.’

    (b) COMMERCIAL REVITALIZATION CREDIT- Subpart E of part IV of subchapter A of chapter 1 of the

Internal Revenue Code of 1986 (relating to rules for computing investment credit) is amended by inserting after section 48 the following new section:

‘SEC. 48A. COMMERCIAL REVITALIZATION CREDIT.

    ‘(a) GENERAL RULE- For purposes of section 46, except as provided in subsection (e), the commercial revitalization credit for any taxable year is an amount equal to the applicable percentage of the qualified revitalization expenditures with respect to any qualified revitalization building.

    ‘(b) APPLICABLE PERCENTAGE- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘applicable percentage’ means--

        ‘(A) 20 percent for the taxable year in which a qualified revitalization building is placed in service, or

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

      The election under subparagraph (B), once made, shall be irrevocable.

      ‘(2) CREDIT PERIOD-

        ‘(A) IN GENERAL- The term ‘credit period’ means, with respect to any building, the period of 10 taxable years beginning with the taxable year in which the building is placed in service.

        ‘(B) APPLICABLE RULES- Rules similar to the rules under paragraphs (2) and (4) of section 42(f) shall apply.

    ‘(c) QUALIFIED REVITALIZATION BUILDINGS AND EXPENDITURES- For purposes of this section--

      ‘(1) QUALIFIED REVITALIZATION BUILDING- The term ‘qualified revitalization building’ means any building (and its structural components) if--

        ‘(A) such building is located in an eligible commercial revitalization area,

        ‘(B) a commercial revitalization credit amount is allocated to the building under subsection (e), and

        ‘(C) depreciation (or amortization in lieu of depreciation) is allowable with respect to the building.

      ‘(2) QUALIFIED REHABILITATION EXPENDITURE-

        ‘(A) IN GENERAL- The term ‘qualified rehabilitation expenditure’ means any amount properly chargeable to capital account--

          ‘(i) for property for which depreciation is allowable under section 168 and which is--

            ‘(I) nonresidential real property, or

            ‘(II) an addition or improvement to property described in subclause (I),

          ‘(ii) in connection with the construction or substantial rehabilitation or reconstruction of a qualified revitalization building, or

          ‘(iii) for the acquisition of land in connection with the qualified revitalization building.

        ‘(B) DOLLAR LIMITATION- The aggregate amount which may be treated as qualified revitalization expenditures with respect to any qualified revitalization building for any taxable year shall not exceed $10,000,000, reduced by any such expenditures with respect to the building taken into account by the taxpayer or any predecessor in determining the amount of the credit under this section for all preceding taxable years.

        ‘(C) CERTAIN EXPENDITURES NOT INCLUDED- The term ‘qualified revitalization expenditure’ does not include--

          ‘(i) STRAIGHT LINE DEPRECIATION MUST BE USED- Any expenditure (other than with respect to land acquisitions) with respect to which the taxpayer does not use the straight line method over a recovery period determined under subsection (c) or (g) of section 168. The preceding sentence shall not apply to any expenditure to the extent the alternative depreciation system of section 168(g) applies to such expenditure by reason of subparagraph (B) or (C) of section 168(g)(1).

          ‘(ii) ACQUISITION COSTS- The costs of acquiring any building or interest therein and any land in connection with such building to the extent that such costs exceed 30 percent of the qualified revitalization expenditures determined without regard to this clause.

          ‘(iii) OTHER CREDITS- Any expenditure which the taxpayer may take into account in computing any other credit allowable under this part unless the taxpayer elects to take the expenditure into account only for purposes of this section.

      ‘(3) ELIGIBLE COMMERCIAL REVITALIZATION AREA- The term ‘eligible commercial revitalization area’ means an empowerment zone or enterprise community designated under subchapter U.

      ‘(4) SUBSTANTIAL REHABILITATION OR RECONSTRUCTION- For purposes of this subsection, a rehabilitation or reconstruction shall be treated as a substantial rehabilitation or reconstruction only if the qualified revitalization expenditures in connection with the rehabilitation or reconstruction exceed 25 percent of the fair market value of the building (and its structural components) immediately before the rehabilitation or reconstruction.

    ‘(d) WHEN EXPENDITURES TAKEN INTO ACCOUNT-

      ‘(1) IN GENERAL- Qualified revitalization expenditures with respect to any qualified revitalization building shall be taken into account for the taxable year in which the qualified rehabilitated building is placed in service. For purposes of the preceding sentence, a substantial rehabilitation or reconstruction of a building shall be treated as a separate building.

      ‘(2) PROGRESS EXPENDITURE PAYMENTS- Rules similar to the rules of subsections (b)(2) and (d) of section 47 shall apply for purposes of this section.

    ‘(e) LIMITATION ON AGGREGATE CREDITS ALLOWABLE WITH RESPECT TO BUILDINGS LOCATED IN A STATE-

      ‘(1) IN GENERAL- The amount of the credit determined under this section for any taxable year with respect to any building shall not exceed the commercial revitalization credit amount (in the case of an amount determined under subsection (b)(1)(B), the present value of such amount as determined under the rules of section 42(b)(2)(C)) allocated to such building under this subsection by the commercial revitalization credit agency. Such allocation shall be made at the same time and in the same manner as under paragraphs (1) and (7) of section 42(h).

      ‘(2) COMMERCIAL REVITALIZATION CREDIT AMOUNT FOR AGENCIES-

        ‘(A) IN GENERAL- The aggregate commercial revitalization credit amount which a commercial revitalization credit agency may allocate for any calendar year is the amount of the State commercial revitalization credit ceiling determined under this paragraph for such calendar year for such agency.

        ‘(B) STATE COMMERCIAL REVITALIZATION CREDIT CEILING-

          ‘(i) IN GENERAL- The State commercial revitalization credit ceiling applicable to any State for any calendar year is $2,000,000 for each empowerment zone and enterprise community in the State designated under subchapter U.

          ‘(ii) SPECIAL RULE WHERE ZONE OR COMMUNITY LOCATED IN MORE THAN 1 STATE- If an empowerment zone or enterprise community is located in more than 1 State, a State’s share of the amount specified in clause (i) with respect to such zone or community shall be an amount that bears the same ratio to $2,000,000 as the population in the State bears to the population in all States in which such zone or community is located.

          ‘(iii) OTHER SPECIAL RULES- Rules similar to the rules of subparagraphs (D), (E), (F), and (G) of section 42(h)(3) shall apply for purposes of this subsection.

        ‘(C) COMMERCIAL REVITALIZATION CREDIT AGENCY- For purposes of this section, the term ‘commercial revitalization credit agency’ means any agency authorized by a State to carry out this section.

    ‘(f) RESPONSIBILITIES OF COMMERCIAL REVITALIZATION CREDIT AGENCIES-

      ‘(1) PLANS FOR ALLOCATION- Notwithstanding any other provision of this section, the commercial revitalization credit dollar amount with respect to any building shall be zero unless--

        ‘(A) such amount was allocated pursuant to a qualified allocation plan of the commercial revitalization credit agency which is approved by the governmental unit (in accordance with rules similar to the rules of section 147(f)(2) (other than subparagraph (B)(ii) thereof)) of which such agency is a part, and

        ‘(B) such agency notifies the chief executive officer (or its equivalent) of the local jurisdiction within which the building is located of such project and provides such individual a reasonable opportunity to comment on the project.

      ‘(2) QUALIFIED ALLOCATION PLAN- For purposes of this subsection, the term ‘qualified allocation plan’ means any plan--

        ‘(A) which sets forth selection criteria to be used to determine priorities of the commercial revitalization credit agency which are appropriate to local conditions,

        ‘(B) which considers--

          ‘(i) the degree to which a project contributes to the implementation of a strategic plan that is devised for an eligible commercial revitalization area through a citizen participation process,

          ‘(ii) the amount of any increase in permanent, full-time employment by reason of any project, and

          ‘(iii) the active involvement of residents and nonprofit groups within the eligible commercial revitalization area, and

        ‘(C) which provides a procedure that the agency (or its agent) will follow in monitoring for compliance with this section.

    ‘(g) TERMINATION- This section shall not apply to any building placed in service after December 31, 2000.’

    (c) CONFORMING AMENDMENTS-

      (1) Section 39(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

      ‘(7) NO CARRYBACK OF SECTION 48A CREDIT BEFORE ENACTMENT- No portion of the unused business credit for any taxable year which is attributable to any commercial revitalization credit determined under section 48A may be carried back to a taxable year ending before the date of the enactment of section 48A.’

      (2) Subparagraph (B) of section 48(a)(2) of such Code is amended by inserting ‘or commercial revitalization’ after ‘rehabilitation’ each place it appears in the text and heading thereof.

      (3) Subparagraph (C) of section 49(a)(1) of such Code is amended by striking ‘and’ at the end of clause (ii), by striking the period at the end of clause (iii) and inserting ‘, and’, and by adding at the end the following new clause:

          ‘(iv) the basis of any qualified revitalization building attributable to qualified revitalization expenditures.’

      (4) Paragraph (2) of section 50(a) of such Code is amended by inserting ‘or 48A(d)(2)’ after ‘section 47(d)’ each place it appears.

      (5) Subparagraph (B) of section 50(a)(2) of such Code is amended by adding at the end the following new sentence: ‘A similar rule shall apply for purposes of section 48A.’

      (6) Subparagraph (A) of section 50(b)(2) of such Code is amended by inserting ‘or qualified revitalization building (respectively)’ after ‘qualified rehabilitated building’.

      (7) Paragraph (2) of section 50(b) of such Code is amended by striking ‘and’ at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting ‘, and’, and by adding at the end the following new subparagraph:

        ‘(E) a qualified revitalization building to the extent of the portion of the basis which is attributable to qualified revitalization expenditures.’

      (8) Subparagraph (C) of section 50(b)(4) of such Code is amended by inserting ‘or commercial revitalization’ after ‘rehabilitated’ each place it appears in the text or heading thereof.

      (9) Subparagraph (C) of section 469(i)(3) is amended--

        (A) by inserting ‘or section 48A’ after ‘section 42’; and

        (B) by striking ‘CREDIT’ in the heading and inserting ‘AND COMMERCIAL REVITALIZATION CREDITS’.

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

Subtitle C--Brownfields Redevelopment Act

SEC. 121. ENVIRONMENTAL REMEDIATION TAX CREDIT FOR CONTAMINATED SITES IN EMPOWERMENT ZONES.

    (a) GENERAL RULE- Part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to credits allowable) is amended by adding at the end the following new subpart:

‘Subpart H--Environmental Remediation Credit for Sites in Empowerment Zones

‘Sec. 54. Amount of environmental remediation credit.

‘Sec. 54A. Definitions and special rules.

‘SEC. 54. AMOUNT OF ENVIRONMENTAL REMEDIATION CREDIT.

    ‘(a) GENERAL RULE- For purposes of section 38, the environmental remediation credit for empowerment zones determined under this section is 50 percent of the costs--

      ‘(1) which are paid or incurred by the taxpayer for environmental remediation with respect to any qualified contaminated site which is owned by the taxpayer, and

      ‘(2) which are incurred by the taxpayer pursuant to an environmental remediation plan for such site which was approved by the Administrator of the Environmental Protection Agency or by the head of any State or local government agency designated by the Administrator to carry out the Administrator’s functions under this subpart with respect to such site.

    ‘(b) REMEDIATION PLAN MUST BE COMPLETED-

      ‘(1) IN GENERAL- Except as otherwise provided in paragraph (2)--

        ‘(A) no environmental remediation credit shall be determined under this section with respect to any qualified contaminated site unless the Administrator of the Environmental Protection Agency (or such Administrator’s designee

under subsection (a)(2)) certifies that the environmental remediation plan for such site has been completed, and

        ‘(B) if such Administrator (or designee) certifies that such plan has been completed, such credit shall be taken into account under subsection (a) ratably over the 5-taxable-year period beginning with the taxable year in which such plan was completed.

      ‘(2) SPECIAL RULE WHERE EXTRAORDINARY COST INCREASES- If--

        ‘(A) the taxpayer determines that due to unforeseen circumstances the cost of completing the remediation plan for any qualified contaminated site exceeds 200 percent of the estimated costs of completing such plan, and

        ‘(B) the State or local official administering the remediation credit program agrees with such determination,

      the taxpayer may cease the implementation of such plan and shall be entitled to an environmental remediation credit with respect to costs incurred before such cessation. Such credit shall be taken into account under subsection (a) ratably over the 5-taxable-year period beginning with the taxable year in which such cessation occurs.

    ‘(c) CERTAIN PARTIES NOT ELIGIBLE- A taxpayer shall not be eligible for any credit determined under this section with respect to any qualified contaminated site if--

      ‘(1) at any time on or before the date of the enactment of this subpart, such taxpayer was the owner or operator of any business on such site,

      ‘(2) at any time before, on, or after such date of enactment such taxpayer--

        ‘(A) had (by contract, agreement, or otherwise) arranged for the disposal or treatment of any hazardous materials at such site or arranged with a transporter for transport for disposal or treatment of any hazardous materials at such site, or

        ‘(B) had accepted any hazardous materials for transport to such site, or

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

    The preceding sentence shall not apply to a taxpayer who became described therein by reason of the acquisition of the business or site through foreclosure (or the equivalent) of a security interest held by the taxpayer or a related party if the taxpayer undertakes to sell or otherwise dispose of such business or site in a reasonably expeditious manner on commercially reasonable terms.

    ‘(d) QUALIFIED CONTAMINATED SITE- For purposes of this subpart, the term ‘qualified contaminated site’ means any contaminated site if--

      ‘(1) the contaminated site is located entirely within an empowerment zone,

      ‘(2) the condition of the contaminated site is such that without participation in the environmental remediation credit program redevelopment is unlikely,

      ‘(3) the contaminated site has not been in productive use for at least 1 year before participation in the program,

      ‘(4) there is a strong likelihood of redevelopment of the site for industrial or commercial use that will result in creation of jobs and expansion of the tax base, and

      ‘(5) environmental remediation and redevelopment are likely to be completed within a reasonable period of time.

‘SEC. 54A. DEFINITIONS AND SPECIAL RULES.

    ‘(a) CONTAMINATED SITE- For purposes of this subpart--

      ‘(1) IN GENERAL- The term ‘contaminated site’ means any site if at least 1 of the following environmental conditions is present on such site:

        ‘(A) A release or threatened release of any hazardous, toxic, or dangerous substance.

        ‘(B) Any storage tanks which contain any hazardous, toxic, or dangerous substance.

        ‘(C) Any illegal disposal of solid waste.

      ‘(2) HAZARDOUS, TOXIC, OR DANGEROUS SUBSTANCE- Any substance, waste, or material shall be treated as a hazardous, toxic, or dangerous substance if it is so treated under--

        ‘(A) the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. 9601 et seq.) as in effect on the date of the enactment of this section, or

        ‘(B) the Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.) as so in effect.

      The following materials shall in any event be treated as such a substance: petroleum or crude oil or any derivative thereof, friable asbestos or any asbestos containing material, polychlorinated biphenyls, and lead paint.

    ‘(b) ENVIRONMENTAL REMEDIATION- For purposes of this subpart, the term ‘environmental remediation’ means--

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

      ‘(2) restoration of natural, historic or cultural resources at the site, or the mitigation of unavoidable losses of such resources incurred in connection with the remediation or response activity,

      ‘(3) health assessments or health effects studies related to the site,

      ‘(4) remediation of off-site contamination caused by activity on the site (other than remediation activities of a type not permitted for the site), and

      ‘(5) any other costs specified in the plan approved under section 54(a)(2), including demolition of existing contaminated structures, site security, permit fees necessary for remediation, and environmental audits.

    ‘(c) RELATED PERSON- For purposes of this subpart, persons shall be treated as related to each other if such persons are treated as a single employer under the regulations prescribed under section 52(b) or such persons bear a relationship to each other specified in section 267(b) or 707(b).’

    (b) CREDIT MADE PART OF GENERAL BUSINESS CREDIT- Subsection (b) of section 38 of such Code is amended by striking ‘plus’ at the end of paragraph (10), by striking the period at the end of paragraph (11) and inserting ‘, plus’, and by adding at the end the following new paragraph:

      ‘(12) the environmental remediation credit for empowerment zones under section 54(a).’

    (c) LIMITATION ON CARRYBACK- Subsection (d) of section 39 of such Code (as amended by section 115(c)) is amended by adding at the end the following new paragraph:

      ‘(8) NO CARRYBACK OF ENVIRONMENTAL REMEDIATION CREDIT BEFORE ENACTMENT- No portion of the unused business credit for any taxable year which is attributable to the credit under section 54 may be carried back to a taxable year ending before the date of the enactment of section 54.’

    (d) DEDUCTION FOR UNUSED CREDIT- Subsection (c) of section 196 of such Code is amended by striking ‘and’ at the end of paragraph (6), by striking the period at the end of paragraph (7) and inserting ‘, and’, and by adding at the end the following new paragraph:

      ‘(8) the environmental remediation credit determined under section 54.’

    (e) CLERICAL AMENDMENT- The table of subparts for part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

‘Subpart H. Environmental remediation credit.’

    (f) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.

SEC. 122. USE OF REDEVELOPMENT BONDS FOR ENVIRONMENTAL REMEDIATION IN EMPOWERMENT ZONES.

    (a) ENVIRONMENTAL REMEDIATION INCLUDED AS REDEVELOPMENT PURPOSE- Subparagraph (A) of section 144(c)(3) of the Internal Revenue Code of 1986 (relating to redevelopment purposes) is amended by striking ‘and’ at the end of clause (iii), by striking the period at the end of clause (iv) and inserting ‘, and’, and by adding at the end the following new clause:

          ‘(v) the costs of environmental remediation (as defined in section 54A(b)) with respect to a qualified contaminated site (as defined in section 54(d)) if such costs are incurred pursuant to an environmental remediation plan which was approved by the Administrator of the Environmental Protection Agency or by the head of any State or local government agency designated by the Administrator to carry out the Administrator’s functions under this clause.’

    (b) CERTAIN REQUIREMENTS NOT TO APPLY TO REDEVELOPMENT BONDS FOR ENVIRONMENTAL REMEDIATION- Subsection (c) of section 144 of such Code is amended by adding at the end the following new paragraph:

      ‘(9) CERTAIN REQUIREMENTS NOT TO APPLY TO REDEVELOPMENT BONDS FOR ENVIRONMENTAL REMEDIATION IN EMPOWERMENT ZONES- In the case of any bond issued as part of an issue 95 percent or more of the proceeds of which are to finance costs referred to in paragraph (3)(A)(v)--

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

        ‘(B) paragraph (2)(A)(ii) shall not apply to any issue issued by the governing body described in paragraph (4)(A) with respect to the area which includes the site,

        ‘(C) the requirement of paragraph (2)(B)(ii) shall be treated as met if--

          ‘(i) the payment of the principal and interest on such issue is secured by taxes imposed by a governmental unit, or

          ‘(ii) such issue is approved by the applicable elected representative (as defined in section 147(f)(2)(E)) of the governmental unit which issued such issue (or on behalf of which such issue was issued),

        ‘(D) subparagraphs (C) and (D) of paragraph (2) shall not apply,

        ‘(E) subparagraphs (C) and (D) of paragraph (4) shall not apply, and

        ‘(F) if the real property referred to in clause (iii) of paragraph (3)(A) is 1 or more dwelling units, such clause shall apply only if the requirements of section 142(d) or 143 (as the case may be) are met with respect to such units.’

    (c) PENALTY FOR FAILURE TO SATISFACTORILY COMPLETE REMEDIATION PLAN- Subsection (b) of section 150 of such Code is amended by adding at the end the following new paragraph:

      ‘(7) QUALIFIED CONTAMINATED SITE REMEDIATION BONDS- In the case of financing provided for costs described in section 144(c)(3)(A)(v), no deduction shall be allowed under this chapter for interest on such financing during any period during which there is a determination by the Administrator of the Environmental Protection Agency (or by the head of any State or local government agency designated by the Administrator to carry out the Administrator’s functions under this paragraph) that the remediation plan under which such costs were incurred was not satisfactorily completed.’

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to bonds issued after the date of the enactment of this Act.

TITLE II--ASSISTANCE FOR INFRASTRUCTURE IMPROVEMENTS AND DEVELOPMENT

SEC. 201. LOAN GUARANTEES.

    (a) AUTHORITY- The Secretary of Housing and Urban Development may guarantee and make commitments to guarantee eligible debt instruments. Any such guarantee or commitment shall be subject to such terms and conditions as the Secretary may prescribe.

    (b) ELIGIBLE DEBT INSTRUMENTS- For purposes of this section, the term ‘eligible debt instrument’ means a note or other obligation that--

      (1) is issued by an eligible unit of general local government (or a public agency designated by such a unit);

      (2) is issued for the purpose of financing any infrastructure activities that are--

        (A) to be carried out within an empowerment zone or enterprise community which is located (in whole or in part) within the unit of general local government; and

        (B) consistent with the strategic plan for the empowerment zone or enterprise community; and

      (3) is in such form and denomination, has such maturity, and is subject to such other conditions as the Secretary shall prescribe.

    (c) SECURITY AND REPAYMENT-

      (1) REQUIREMENTS ON ISSUER- To ensure the repayment of eligible debt instruments guaranteed under this section and as a condition for receiving such guarantees, the Secretary shall require the unit of local government issuing the debt instrument to--

        (A) enter into a contract, in a form acceptable to the Secretary, for repayment of the debt instrument guaranteed; and

        (B) furnish, at the discretion of the Secretary, such other security as may be deemed appropriate by the Secretary in making such guarantees.

      (2) FULL FAITH AND CREDIT- The full faith and credit of the United States is hereby pledged to the payment of all guarantees made under this section. Any such guarantee made by the Secretary shall be conclusive evidence of the eligibility of the debt instrument for such guarantee with respect to principal and interest, and the validity of any such guarantee so made shall be incontestable in the hands of a holder of the guaranteed debt instruments.

    (d) LIMITATIONS ON AMOUNT OF GUARANTEES-

      (1) AGGREGATE FISCAL YEAR LIMITATION- Notwithstanding any other provision of law, to the extent approved or provided in appropriation Acts, the Secretary may enter into commitments under this section to guarantee eligible debt instruments with an aggregate principal amount not exceeding $50,000,000.

      (2) LIMITATIONS ON EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES- The aggregate amount of the eligible debt instruments for financing infrastructure activities in a single empowerment zone or enterprise community that are guaranteed under this section may not exceed, in any single fiscal year--

        (A) $3,000,000, with respect to any empowerment zone; and

        (B) $1,000,000, with respect to any enterprise community.

    (e) ELIGIBILITY OF ISSUERS- The Secretary shall establish criteria for use in determining whether to guarantee the eligible debt instruments of an eligible unit of general local government, which shall include consideration of the following factors:

      (1) The extent to which the activities to be assisted with the proceeds of the eligible debt instruments guaranteed will benefit residents of the empowerment zone or enterprise community involved.

      (2) The extent to which the empowerment zone or enterprise community involved is located within the area of jurisdiction of the eligible unit of general local government that is the issuer of the eligible debt instruments.

      (3) The extent of cooperation between the eligible unit of general local government that is the issuer and any other governments with jurisdiction over the empowerment zone or enterprise community.

      (4) The extent of private and community participation in the activities to be assisted with the proceeds of the eligible debt instruments guaranteed.

      (5) The extent to which the activities to be assisted with the eligible debt instruments guaranteed will be financed with amounts other than such proceeds.

      (6) Such other criteria as the Secretary may prescribe.

    (f) AUTHORIZATION OF APPROPRIATIONS FOR CREDIT SUBSIDY- There are authorized to be appropriated to cover the costs (as such term is defined in section 502 of the Congressional Budget Act of 1974) of guarantees under this section, such sums as may be necessary for fiscal year 1997. Any amounts appropriated pursuant to this subsection shall remain available until expended.

    (g) TERMINATION- The Secretary may not guarantee any eligible debt instruments under this subsection after September 30, 2001, except pursuant to a guarantee issued on or before such date.

SEC. 202. REVOLVING FUND FOR LOANS.

    (a) IN GENERAL- The Secretary shall establish and administer a revolving loan fund under this section and may use amounts in the fund to make loans to eligible units of general local government to carry out infrastructure activities.

    (b) USE OF AMOUNTS- Amounts in the revolving loan fund established under this section shall be available, to the extent provided in appropriation Acts, only for--

      (1) loans to eligible units of general local government to carry out infrastructure activities that are--

        (A) to be carried out within the empowerment zone or enterprise community which is located (in whole or in part) within the unit of general local government; and

        (B) consistent with the strategic plan for the empowerment zone or enterprise community; and

      (2) reasonable administrative costs of the fund.

    (c) CREDITS- The loan fund established under this section shall be credited with--

      (1) any amounts appropriated for deposit in the fund;

      (2) any repayment of principal and interest under a loan made from the fund;

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

      (4) any other amounts dedicated to the fund.

    (d) LOAN AMOUNT LIMITATION- The aggregate amount of the loans made under this section for infrastructure activities in any single empowerment zone or enterprise community may not exceed, in any single fiscal year--

      (1) $3,000,000, with respect to any empowerment zone; and

      (2) $1,000,000, with respect to any enterprise community.

    (e) ELIGIBILITY OF BORROWERS- The Secretary shall establish criteria for use in determining whether to make a loan from the fund established under this section to an applicant eligible unit of general local government, which shall include consideration of the following factors:

      (1) The extent to which the activities to be assisted with the loan amounts are consistent with the strategic plan for empowerment zone or enterprise community.

      (2) The extent to which the activities to be assisted with the loan amounts will benefit residents of the empowerment zone or enterprise community involved.

      (3) The extent to which the empowerment zone or enterprise community involved is located within

the area of jurisdiction of the applicant unit of general local government.

      (4) The extent of cooperation between the applicant unit of general local government and any other governments with jurisdiction over the empowerment zone or enterprise community.

      (5) The extent of private and community participation in the activities to be assisted with the loan amounts.

      (6) The extent to which the activities to be assisted with the loan amounts will be financed with amounts other than such loan proceeds.

      (7) Such other criteria as the Secretary may prescribe.

    (f) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated for deposit in the loan fund established under this section $50,000,000 for fiscal year 1997.

SEC. 203. GRANTS TO UNITS OF GENERAL LOCAL GOVERNMENT.

    (a) IN GENERAL- The Secretary may make grants under this section to eligible units of general local government to carry out infrastructure activities.

    (b) GRANT AMOUNT LIMITATION- The aggregate amount of the grants made under this section for infrastructure activities in any single empowerment zone or enterprise community may not exceed, in any single fiscal year--

      (1) $3,000,000, with respect to any empowerment zone; and

      (2) $1,000,000, with respect to any enterprise community.

    (c) USE OF GRANT AMOUNTS- Amounts from a grant under this section may be used only for carrying out infrastructure activities that are--

      (1) to be carried out within the empowerment zone or enterprise community which is located (in whole or in part) within the unit of general local government to which the grant is made; and

      (2) consistent with the strategic plan for the empowerment zone or enterprise community.

    Such infrastructure activities may be carried out directly by the grantee or by subgrantees.

    (d) SELECTION OF GRANTEES- The Secretary shall select eligible units of general local government to receive grants under this section from among the units that apply for grants. The Secretary shall establish requirements and procedures for applications under this section. Selection shall be made under a competition based on the following criteria:

      (1) The extent to which the activities to be assisted with grant amounts are consistent with the strategic plan for empowerment zone or enterprise community.

      (2) The extent to which the activities to be assisted with grant amounts will benefit residents of the empowerment zone or enterprise community involved.

      (3) The extent to which the empowerment zone or enterprise community involved is located within the area of jurisdiction of the applicant unit of general local government.

      (4) The extent of cooperation between the applicant unit of general local government and any other governments with jurisdiction over the empowerment zone or enterprise community.

      (5) The extent of private and community participation in the activities to be assisted with the loan amounts.

      (6) The extent to which the activities to be assisted with grant amounts will be assisted with amounts other than such grant amounts.

      (7) Such other criteria as the Secretary may prescribe.

    (e) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated for grants under this section $10,000,000 for each of fiscal years 1997, 1998, 1999, 2000, and 2001. Any amounts appropriated pursuant to this subsection shall remain available until expended.

SEC. 204. ELIGIBLE UNITS OF GENERAL LOCAL GOVERNMENT.

    For purposes of this title, the term ‘eligible unit of general local government’ means a unit of general local government that has an area of jurisdiction within which is located all or part of an empowerment zone or enterprise community for which the designation referred to in paragraph (1) or (2) of section 206 is in effect.

SEC. 205. INFRASTRUCTURE ACTIVITIES.

    For purposes of this title, the term ‘infrastructure activities’ means the provision, improvement, or development of--

      (1) roads, streets, tunnels, bridges, or sidewalks;

      (2) convention or trade show facilities;

      (3) airports, commercial ports, docks, or wharves, mass commuting facilities, parking facilities, or storage or training facilities directly related to any other facility under this paragraph;

      (4) intermodal transportation facilities;

      (5) sewage or solid waste disposal facilities or facilities for the local furnishing of electric energy or gas;

      (6) air or water pollution control facilities;

      (7) facilities for the furnishing of water for any purpose if--

        (A) the water is or will be made available to members of the general public; and

        (B)(i) the facilities are operated by a governmental unit, or (ii) the rates for the furnishing or sale of water have been established or approved by a State or unit of general local government, by an agency or instrumentality of the United States, or by a public service or public utility commission or other similar body of any State or unit of general local government;

      (8) hydroelectric generating facilities;

      (9) mass commuting vehicles or systems;

      (10) local district heating or cooling facilities;

      (11) projects for residential rental property, if at all times during the 10-year period beginning upon the initial occupancy of the project (as the Secretary shall determine) 20 percent or more of the dwelling units in each of the projects are available for occupancy only by low-income families (as such term is defined in section 3 of the United States Housing Act of 1937);

      (12) land as the site for an industrial park (which includes the acquisition of land, the provision of water, sewage, drainage, and similar facilities, and transportation, power, and communication facilities incidental to use of the site as an industrial park, but does not include the provision of structures or buildings); or

      (13) computer or automation technology for--

        (A) the establishment of local public- or educational-sector wide area networks (including providing public access sites and systems integration); or

        (B) federally designated national information highway facilities.

SEC. 206. DEFINITIONS.

    For purposes of this title, the following definitions shall apply:

      (1) EMPOWERMENT ZONE- The term ‘empowerment zone’ means an area that has been designated as an empowerment zone under part I of subchapter U of chapter 1 of the Internal Revenue Code of 1986.

      (2) ENTERPRISE COMMUNITY- The term ‘enterprise community’ means an area that has been designated as an enterprise community under part I of subchapter U of chapter 1 of the Internal Revenue Code of 1986.

      (3) SECRETARY- The term ‘Secretary’ means the Secretary of Housing and Urban Development.

      (4) STRATEGIC PLAN- The term ‘strategic plan’ means, with respect to an empowerment zone or enterprise community, the plan contained in the application for designation of the area as such a zone or community under part I of subchapter U of chapter 1 of the Internal Revenue Code of 1986.

      (5) UNIT OF GENERAL LOCAL GOVERNMENT- The term ‘unit of general local government’ means--

        (A) any county, city, town, township, parish, village, or other general purpose political subdivision of a State; and

        (B) any combination of political subdivisions described in subparagraph (A) recognized by the Secretary.

SEC. 207. REGULATIONS.

    The Secretary may issue any regulations necessary to carry out this title.

TITLE III--ADDITIONAL BENEFITS FOR EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES

SEC. 301. EDUCATION GRANTS.

    (a) SHORT TITLE- This section may be cited as the ‘Give Students the Power to Work Program Act’.

    (b) PROGRAM AUTHORIZED- The Secretary of Education is authorized to provide grants to local educational agencies located in empowerment zones to provide students in such areas with the employment skills and technologies necessary to sustain or improve businesses and industries located in such zones.

    (c) AUTHORIZATION- There are authorized to be appropriated $30,000,000 for fiscal year 1997 to carry out this section.

SEC. 302. MINIMUM ALLOCATION OF FOREIGN ASSISTANCE FOR PURCHASE OF CERTAIN UNITED STATES GOODS.

    (a) ALLOCATION OF ASSISTANCE- Notwithstanding any other provision of law, effective beginning with fiscal year 1997, not less than 15 percent of United States assistance provided in a fiscal year shall be provided in the form of credits which may only be used for the purchase of United States goods produced, manufactured, or assembled in empowerment zones, enterprise communities, or enterprise zones within the United States.

    (b) UNITED STATES ASSISTANCE- As used in this section, the term ‘United States assistance’ means--

      (1) any assistance under the Foreign Assistance Act of 1961;

      (2) sales, or financing of sales under the Arms Export Control Act; and

      (3) assistance and other activities under the Support for East European Democracy (SEED) Act of 1989 (Public Law 101-179).

    (c) DEFINITIONS- As used in this section:

      (1) The term ‘empowerment zone’ means a zone designated as an empowerment zone pursuant to subchapter U of chapter 1 of the Internal Revenue Code of 1986 (26 U.S.C. 1391 et seq.).

      (2) The term ‘enterprise community’ means a community designated as an enterprise community pursuant to subchapter U of chapter 1 of the Internal Revenue Code of 1986 (26 U.S.C. 1391 et seq.).

SEC. 303. REQUIREMENT FOR FEDERAL GOVERNMENT TO PROCURE 15 PERCENT OF GOODS AND SERVICES FROM BUSINESSES LOCATED IN EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES.

    (a) CIVILIAN AGENCY ACQUISITIONS- (1) Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.) is amended by adding at the end the following new section:

‘SEC. 317. REQUIREMENT TO PROCURE GOODS AND SERVICES FROM ENTITIES LOCATED IN EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES.

    ‘(a) REQUIREMENT- At least 15 percent of the amount obligated in a fiscal year by an executive agency for contracts for the procurement of goods and services shall be obligated for contracts to be carried out by entities located in empowerment zones or enterprise communities.

    ‘(b) LIMITATION- The requirement of subsection (a) shall not apply to the extent that the goods or services to be procured--

      ‘(1) are not reasonably available within a reasonable period of time from an entity located in an empowerment zone or enterprise community;

      ‘(2) are so available, but fail to meet the performance standards set forth in the applicable specifications or fail to meet the reasonable performance standards of the procuring agency; or

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

    ‘(c) DEFINITION- For purposes of this section, the terms ‘empowerment zone’ and ‘enterprise community’ mean such a zone or community designated under section 1391 of the Internal Revenue Code of 1986.’.

    (2) The table of contents for such title is amended by adding after the item relating to section 316 the following new item:

      ‘Sec. 317. Requirement to procure goods and services from entities located in empowerment zones and enterprise communities.’.

    (b) ARMED SERVICES ACQUISITIONS- (1) Chapter 137 of title 10, United States Code, is amended by adding at the end the following new section:

‘Sec. 2332. Requirement to procure goods and services from entities located in empowerment zones and enterprise communities.

    ‘(a) REQUIREMENT- At least 15 percent of the amount obligated in a fiscal year by an agency listed in section 2303 for contracts for the procurement of goods and services shall be obligated for contracts to be carried out by entities located in empowerment zones or enterprise communities.

    ‘(b) LIMITATION- The requirement of subsection (a) shall not apply to the extent that the goods or services to be procured--

      ‘(1) are not reasonably available within a reasonable period of time from an entity located in an empowerment zone or enterprise community;

      ‘(2) are so available, but fail to meet the performance standards set forth in the applicable specifications or fail to meet the reasonable performance standards of the procuring agency; or

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

    ‘(c) DEFINITION- For purposes of this section, the terms ‘empowerment zone’ and ‘enterprise community’ mean such a zone or community designated under section 1391 of the Internal Revenue Code of 1986.’.

    (2) The table of sections at the beginning of such chapter is amended by adding at the end the following new item:

      ‘2332. Requirement to procure goods and services from entities located in empowerment zones and enterprise communities.’.

    (c) EFFECTIVE DATE- Section 317 of the Federal Property and Administrative Services Act of 1949 and section 2332 of title 10, United States Code, as added by subsections (a) and (b), respectively, shall take effect on October 1, 1996.

SEC. 304. REQUIREMENT FOR FEDERAL GOVERNMENT TO PROCURE RECYCLED MATERIALS FROM ENTITIES LOCATED IN EMPOWERMENT ZONES.

    (a) REQUIREMENT- Section 6002(c)(1) of the Solid Waste Disposal Act (42 U.S.C. 6962(c)(1)) is amended by inserting after the first sentence the following: ‘Such items shall be procured from entities located in empowerment zones, as designated under section 1391 of the Internal Revenue Code of 1986.’.

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect on October 1, 1996.

SEC. 305. GET EMPOWERMENT ZONES MOVING PROGRAM.

    (a) IN GENERAL- The Secretary of Transportation may make grants to a State or local government in which an empowerment zone is located to finance innovative programs for meeting the transportation needs of the empowerment zone.

    (b) APPLICATIONS- In order to be eligible to receive a grant under this section, a State or local government shall submit to the Secretary an application that is in such form and contains such information as the Secretary may require.

    (c) USE OF GRANTS- Amounts from grants made under this section may be used to carry out innovative transportation programs in an empowerment zone for any of the following purposes:

      (1) Leasing and operating special transportation vehicles.

      (2) Enhancing mobility in and around the empowerment zone.

      (3) Improving public safety in the empowerment zone.

      (4) Other purposes designed to meet the transportation needs of the empowerment zone, as approved by the Secretary.

    (d) EMPOWERMENT ZONE DEFINED- In this section, the term ‘empowerment zone’ means a zone designated under section 1391 of the Internal Revenue Code of 1986.

    (e) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated to carry out this section $27,000,000 in the aggregate for fiscal years 1997 through 2001. Such sums shall remain available until expended.

TITLE IV--REGULATORY FLEXIBILITY

SEC. 401. DEFINITION OF SMALL ENTITIES IN EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES FOR ANALYSIS OF REGULATORY FUNCTIONS.

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

      (1) by striking ‘and’ at the end of paragraph (5); and

      (2) by striking paragraph (6) and inserting the following:

      ‘(6) the term ‘small entity’ means--

        ‘(A) a small business, small organization, or small governmental jurisdiction defined in paragraphs (3), (4), and (5) of this section; and

        ‘(B)(i) any enterprise zone business (as defined by section 1394(b)(3) of the Internal Revenue Code of 1986);

        ‘(ii) any unit of government that nominated an area which the appropriate Secretary designates as an empowerment zone or enterprise community (within the meaning of section 1391 of the Internal Revenue Code of 1986) that has a rule pertaining to the carrying out

of any project, activity, or undertaking within such zone or community; and

        ‘(iii) any not-for-profit enterprise carrying out a significant portion of its activities within such a zone or community.

      For purposes of subparagraph (B)(ii), the term ‘appropriate Secretary’ has the meaning given such term by section 1393(a)(1) of the Internal Revenue Code of 1986.’

SEC. 402. WAIVER OR MODIFICATION OF AGENCY RULES IN EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES.

    (a) IN GENERAL- Chapter 6 of title 5, United States Code, is amended by adding after section 612 the following new section:

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

    ‘(a) Upon the written request of any government which nominated an area that the appropriate Secretary has designated as an empowerment zone or enterprise community under section 1391 of the Internal Revenue Code of 1986, an agency is authorized, in order to further the job creation, community development, or economic revitalization objectives with respect to such zone or community, to waive or modify all or part of any rule which such agency has authority to promulgate, as such rule pertains to the carrying out of projects, activities, or undertakings within such zone or community.

    ‘(b) Nothing in this section shall authorize an agency to waive or modify any rule adopted to carry out a statute or Executive order which prohibits, or the purpose of which is to protect persons against, discrimination on the basis of race, color, religion, sex, familial status, national origin, age, or handicap.

    ‘(c) A request under subsection (a) shall specify the rule or rules to be waived or modified and the change proposed, and shall briefly describe why the change would promote the achievement of the job creation, community development, or economic revitalization objectives of the empowerment zone or enterprise community. If such a request is made to any agency other than the Department of Housing and Urban Development or the Department of Agriculture, the requesting government shall send a copy of the request to the Secretary of Housing and Urban Development or to the Secretary of Agriculture, whichever is appropriate, at the time the request is made.

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

      (i) identify the requirements for which the modification or waiver is sought;

      ‘(ii) identify the existing or proposed business or type of business to which the modification or waiver would pertain;

      ‘(iii) demonstrate that the public interest which the proposed change would serve in furthering such job creation, community development, or economic revitalization outweighs the public interest which continuation of the rule unchanged would serve;

      ‘(iv) demonstrate the extent to which the proposed change is likely to further job creation, community development, or economic revitalization within the empowerment zone or enterprise community against the effect the change is likely to have on the underlying purposes of applicable statutes in the geographic area which would be affected by the change; and

      ‘(v) demonstrate that the waiver or modification is necessary because the existing rule impedes the implementation of an existing or proposed business or type of business that furthers job creation, community development, or economic revitalization.

    ‘(e) The agency may approve, in its discretion, a petition upon determining that the petition meets the above-stated criteria. The agency shall not approve any request

to waive or modify a rule if that waiver or modification would--

      ‘(1) violate a statutory requirement (including any requirements of the Fair Labor Standards Act of 1938 (52 Stat. 1060; 29 U.S.C. 201 et seq.)); or

      ‘(2) be likely to present a significant risk to the public health, including environmental or occupational health or safety or environmental pollution.

    ‘(f) A modified rule shall be enforceable as if it were the issuance of an amendment to the rule being modified or waived.

    ‘(g) If a request is disapproved, the agency shall inform all the requesting governments, and the appropriate Secretary (as defined in section 1393(a)(1) of the Internal Revenue Code of 1986), in writing of the reasons therefor and shall, to the maximum extent possible, work with such governments to develop an alternative, consistent with the standards contained in subsection (d).

    ‘(h) No later than the date on which the petitioner submits the petition to the agency, the petitioner shall inform the public of the submission of such petition (including a brief description of the petition) through publication of a notice in newspapers of general circulation in the area in which the facility is located. The agency may authorize or require petitioners to use additional or alternative means of informing the public of the submission of such petitions. If the agency proposes to grant the petitions, the agency shall provide public notice and opportunity to comment. The agency shall publish a notice in the Federal Register stating any waiver or modification of a rule under this section, the time such waiver or modification takes effect and its duration, and the scope of the applicability of such waiver or modification, consistent with Administrative Procedure Act requirements.

    ‘(i) In the event that an agency proposes to amend a rule for which a waiver or modification under this section is in effect, the agency shall not change the waiver or modification to impose additional requirements unless it determines, consistent with standards contained in subsection (d), that such action is necessary. Such determinations shall be published with the proposal to amend such rule.

    ‘(j) No waiver or modification of a rule under this section shall remain in effect with respect to an empowerment zone or enterprise community after the zone or community designation has expired or has been revoked.

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

      ‘(1) any rule as defined in section 551(4) of this title, or

      ‘(2) any rulemaking conducted on the record after opportunity for an agency hearing pursuant to sections 556 and 557 of this title.’

    (b) CLERICAL AMENDMENT- The analysis for chapter 6 of title 5, United States Code, is amended by inserting after the item relating to section 612, the following new item:

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

    (c) CONFORMING AMENDMENTS-

      (1) Section 601(2) of such title 5 is amended by inserting ‘(except for purposes of section 613)’ before ‘means’.

      (2) Section 612 of such title 5 is amended--

        (A) in subsection (a), by inserting ‘(except section 613)’ after ‘chapter’; and

        (B) in subsection (b), by inserting ‘as defined in section 601(2)’ before the period at the end of the first sentence.