A bill to amend the internal Revenue Code of 1986 to allow taxpayers a credit against income tax for expenditures to remediate contaminated sites.

Summary: Brownfields Revitalization Act of 2004 - Amends the Internal Revenue Code to allow a business tax credit for up to 50 percent of qualified remediation expenditures for contaminated sites (property used in a trade or business on which there has been a release (or threat of release) or disposal of any hazardous substance) in certain poverty-rated areas. Defines "qualified remediation expenditures" as expenditures for: (1) the abatement or control of any hazardous substance, petroleum, or any petroleum by-product at a contaminated site in accordance with a State-approved remediation and redevelopment plan; (2) the complete demolition of a structure; (3) the removal and disposal of property; and (4) the reconstruction of utilities on a contaminated site.

Requires States to allocate credit amounts under an allocation plan that considers specified criteria, including: (1) poverty rates: (2) location of a contaminated site; and (3) the amount of new employment expected to result from redevelopment. Imposes a ceiling on the State environmental remediation credit and limits the national environmental remediation credit for each calendar year to $1 billion. Sets forth special rules for: (1) allocating unused environmental remediation credit carryover amounts among States: (2) adjusting the limitation on the national environmental remediation credit for inflation; (3) assigning portions of the credit; and (4) recapturing credit amounts if a taxpayer fails to properly complete environmental remediation under a State approved remediation and redevelopment plan.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Brownfields Revitalization Act of 
2004''.

SEC. 2. CREDIT FOR EXPENDITURES TO REMEDIATE CONTAMINATED SITES.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by adding at the end the following new section:

``SEC. 45G. ENVIRONMENTAL REMEDIATION CREDIT.

    ``(a) In General.--For purposes of section 38, the environmental 
remediation credit determined under this section is 50 percent of the 
qualified remediation expenditures paid or incurred by the taxpayer 
during the taxable year with respect to a qualified contaminated site 
located in an eligible area.
    ``(b) Qualified Remediation Expenditures.--For purposes of this 
section, the term `qualified remediation expenditures' means 
expenditures, whether or not chargeable to capital account, in 
connection with--
            ``(1) the abatement or control of any hazardous substance 
        (as defined in section 198(d)), petroleum, or any petroleum by-
        product at the qualified contaminated site in accordance with 
        an approved remediation and redevelopment plan,
            ``(2) the complete demolition of any structure on such site 
        if any portion of such structure is demolished in connection 
        with such abatement or control,
            ``(3) the removal and disposal of property in connection 
        with the activities described in paragraphs (1) and (2), and
            ``(4) the reconstruction of utilities in connection with 
        such activities.
For purposes of this section, the term `approved remediation and 
redevelopment plan' means any plan for such abatement, control, and 
redevelopment of a qualified contaminated site which is approved by the 
State development agency for the State in which the qualified 
contaminated site is located.
    ``(c) Credit May Not Exceed Allocation.--
            ``(1) In general.--The environmental remediation credit 
        determined under this section with respect to any qualified 
        contaminated site shall not exceed the credit amount allocated 
        under this section by the State development agency to the 
        taxpayer for the remediation and redevelopment plan submitted 
        by the taxpayer with respect to such site.
            ``(2) Time for making allocation.--An allocation shall be 
        taken into account under paragraph (1) for any taxable year 
        only if made before the close of the calendar year in which 
        such taxable year begins.
            ``(3) Manner of allocation.--
                    ``(A) Allocation must be pursuant to plan.--No 
                amount may be allocated under this subsection to any 
                qualified contaminated site unless such amount is 
                allocated pursuant to a qualified allocation plan of 
                the State development agency of the State in which such 
                site is located.
                    ``(B) Qualified allocation plan.--For purposes of 
                this paragraph, the term `qualified allocation plan' 
                means any plan--
                            ``(i) which sets forth selection criteria 
                        to be used to determine priorities of the State 
                        development agency in allocating credit amounts 
                        under this section, and
                            ``(ii) which gives preference in allocating 
                        credit amounts under this section to qualified 
                        contaminated sites based on--
                                    ``(I) the extent of poverty,
                                    ``(II) whether the site is located 
                                in an enterprise zone or renewal 
                                community,
                                    ``(III) whether the site is located 
                                in the central business district of the 
                                local jurisdiction,
                                    ``(IV) the extent of the required 
                                environmental remediation,
                                    ``(V) the extent of the commercial, 
                                industrial, or 
residential redevelopment of the site in addition to environmental 
remediation,
                                    ``(VI) the extent of the financial 
                                commitment to such redevelopment, and
                                    ``(VII) the amount of new 
                                employment expected to result from such 
                                redevelopment.
            ``(4) States may impose other conditions.--Nothing in this 
        section shall be construed to prevent any State from requiring 
        assurances, including bonding, that any project for which a 
        credit amount is allocated under this section will be properly 
        completed or that the financial commitments of the taxpayer are 
        actually carried out.
    ``(d) State Environmental Remediation Credit Ceiling.--
            ``(1) In general.--The State environmental remediation 
        credit ceiling applicable to any State for any calendar year 
        shall be an amount equal to the sum of--
                    ``(A) the unused State environmental remediation 
                credit ceiling (if any) of such State for the preceding 
                calendar year,
                    ``(B) such State's share of the national 
                environmental remediation credit limitation for the 
                calendar year,
                    ``(C) the amount of State environmental remediation 
                credit ceiling returned in the calendar year, plus
                    ``(D) the amount (if any) allocated under paragraph 
                (3) to such State by the Secretary.
        For purposes of subparagraph (A), the unused State 
        environmental remediation credit ceiling for any calendar year 
        is the excess (if any) of the sum of the amounts described in 
        subparagraphs (B), (C), and (D) over the aggregate 
        environmental remediation credit amount allocated for such 
        year.
            ``(2) National environmental remediation credit 
        limitation.--
                    ``(A) In general.--The national environmental 
                remediation credit limitation for each calendar year is 
                $1,000,000,000.
                    ``(B) State's share of limitation.--A State's share 
                of such limitation is the amount which bears the same 
                ratio to the limitation applicable under subparagraph 
                (A) for the calendar year as such State's population 
                bears to the population of the United States.
            ``(3) Unused environmental remediation credit carryovers 
        allocated among certain states.--
                    ``(A) In general.--The unused environmental 
                remediation credit carryover of a State for any 
                calendar year shall be assigned to the Secretary for 
                allocation among qualified States for the succeeding 
                calendar year.
                    ``(B) Unused environmental remediation credit 
                carryover.--For purposes of this paragraph, the unused 
                environmental remediation credit carryover of a State 
                for any calendar year is the excess (if any) of--
                            ``(i) the unused State environmental 
                        remediation credit ceiling for the year 
                        preceding such year, over
                            ``(ii) the aggregate environmental 
                        remediation credit amount allocated for such 
                        year.
                    ``(C) Formula for allocation of unused 
                environmental remediation credit carryovers among 
                qualified states.--Rules similar to the rules of 
                clauses (iii) and (iv) of section 42(h)(3)(D) shall 
                apply for purposes of this paragraph.
            ``(4) Population.--For purposes of this subsection, 
        population shall be determined in accordance with section 
        146(j).
            ``(5) Inflation adjustment.--In the case of any calendar 
        year after 2004, the $1,000,000,000 amount contained in 
        paragraph (2) shall be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year, determined 
                by substituting `calendar year 2003' for `calendar year 
                1992' in subparagraph (B) thereof.
        Any increase determined under the preceding sentence shall be 
        rounded to the nearest multiple of $500,000.
    ``(e) Eligible Area; Other Definitions.--For purposes of this 
section--
            ``(1) Eligible area.--
                    ``(A) In general.--The term `eligible area' means 
                the entire area encompassed by a local governmental 
                unit if such area contains at least 1 census tract 
                having a poverty rate of at least 20 percent.
                    ``(B) Areas not within census tracts.--In the case 
                of an area which is not tracted for population census 
                tracts, the equivalent county divisions (as defined by 
                the Bureau of the Census for purposes of defining 
                poverty areas) shall be used for purposes of 
                determining poverty rates.
                    ``(C) Use of census data.--Population and poverty 
                rate shall be determined by the most recent decennial 
                census data available.
            ``(2) Qualified contaminated site.--The term `qualified 
        contaminated site' has the meaning given to such term by 
        section 198, determined by treating petroleum and petroleum by-
        products as hazardous substances.
            ``(3) Possessions treated as states.--The term `State' 
        includes a possession of the United States.
    ``(f) Credit May Be Assigned.--
            ``(1) In general.--If a taxpayer elects the application of 
        this subsection for any taxable year, the amount of credit 
        determined under this section for such year which would (but 
        for this subsection) be allowable to the taxpayer shall be 
        allowable to the person designated by the taxpayer. The person 
        so designated shall be treated as the taxpayer for purposes of 
        subsection (h).
            ``(2) Treatment of amounts paid for assignment.--If any 
        amount is paid to the person who assigns the credit determined 
        under this section, no portion of such amount or such credit 
        shall be includible in the payee's gross income.
    ``(g) Treatment of Potential Responsible Parties.--
            ``(1) In general.--No credit shall be allowed under this 
        section to any potential responsible party (within the meaning 
        of the Comprehensive Environmental Response, Compensation, and 
        Liability Act of 1980) with respect to any qualified 
        contaminated site (including by reason of receiving an 
        assignment of the credit under subsection (f)) unless at least 
        25 percent of the cost of remediating such site is borne by 
        such party.
            ``(2) Relief from liability for other 75 percent.--If the 
        requirement of paragraph (1) is met by a potential responsible 
        party, such party shall not be liable under any Federal law for 
        any cost taken into account in determining whether such 
        requirement is met.
            ``(3) Amounts paid for credit assignment not eligible.--
        Amounts paid by a potential responsible party to any person for 
        the assignment by such person of the credit under subsection 
        (f)) shall not be taken into account in determining whether the 
        requirement of paragraph (1) is met.
    ``(h) Recapture of Credit if Environmental Remediation Not Properly 
Completed.--
            ``(1) In general.--If the State development agency of the 
        State in which the qualified contaminated site is located 
        determines that the environmental remediation which is part of 
        the approved remediation and redevelopment plan for such site 
        was not properly completed, then the taxpayer's tax under this 
        chapter for the taxable year in which such determination is 
        made shall be increased by the credit recapture amount.
            ``(2) Credit recapture amount.--For purposes of paragraph 
        (1), the credit recapture amount is an amount equal to the sum 
        of--
                    ``(A) the aggregate decrease in the credits allowed 
                to the taxpayer under section 38 for all prior taxable 
                years which would have resulted if the credit allowable 
                by reason of this section were not allowed, plus
                    ``(B) interest at the overpayment rate established 
                under section 6621 on the amount determined under 
                subparagraph (A) for each prior taxable year for the 
                period beginning on the due date for filing the return 
                for the prior taxable year involved.
        No deduction shall be allowed under this chapter for interest 
        described in subparagraph (B).
            ``(3) Special rules.--
                    ``(A) Tax benefit rule.--The tax for the taxable 
                year shall be increased under paragraph (1) only with 
                respect to credits allowed by reason of this section 
                which were used to reduce tax liability. In the case of 
                credits not so used to reduce tax liability, the 
                carryforwards and carrybacks under section 39 shall be 
                appropriately adjusted.
                    ``(B) No credits against tax.--Any increase in tax 
                under this subsection shall not be treated as a tax 
                imposed by this chapter for purposes of determining the 
                amount of any credit or the tax imposed by section 55.
    ``(i) Denial of Double Benefit.--
            ``(1) In general.--No deduction shall be allowed for that 
        portion of the qualified remediation expenditures otherwise 
        allowable as a deduction for the taxable year which is equal to 
        the amount of the credit determined for such taxable year under 
        this section.
            ``(2) Similar rule where taxpayer capitalizes rather than 
        deducts expenses.--If--
                    ``(A) the amount of the credit determined for the 
                taxable year under this section, exceeds
                    ``(B) the amount allowable as a deduction for such 
                taxable year for qualified remediation expenditures 
                (determined without regard to paragraph (1)),
        the amount chargeable to capital account for the taxable year 
        for such expenditures shall be reduced by the amount of such 
        excess.
            ``(3) Controlled groups.--In the case of a corporation 
        which is a member of a controlled group of corporations (within 
        the meaning of section 52(a)) or a trade or business which is 
        treated as being under common control with other trades or 
        businesses (within the meaning of section 52(b)), this 
        subsection shall be applied under rules prescribed by the 
        Secretary similar to the rules applicable under subsections (a) 
        and (b) of section 52.''
    (b) Credit Treated as Business Credit.--Section 38(b) of such Code 
is amended by striking ``plus'' at the end of paragraph (14), by 
striking the period at the end of paragraph (15) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
            ``(16) the environmental remediation credit determined 
        under section 45G(a).''.
    (c) No Carrybacks Before Effective Date.--Subsection (d) of section 
39 of such Code (relating to carryback and carryforward of unused 
credits) is amended by adding at the end the following:
            ``(11) No carryback of section 45g credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the environmental remediation 
        credit determined under section 45G may be carried back to a 
        taxable year ending before the date of the enactment of section 
        45G.''.
    (d) Conforming Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following new item:

                              ``Sec. 45G. Environmental remediation 
                                        credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.