[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3241 Introduced in House (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.
                                 <all>