To amend the Internal Revenue Code of 1986 to allow a credit for the cleanup of certain contaminated industrial sites.

Summary: Amends the Internal Revenue Code to establish an environmental remediation credit program that allows businesses a credit for 40 percent of the costs incurred for:  (1) environmental remediation with respect to any qualified contaminated site; and (2) an approved environmental remediation plan. 
Requires the Secretary of Housing and Urban Development to designate States for participation in the credit program.  Establishes the overall credit limitation and provides for its allocation among eligible States. 
Allows the issuance of tax-exempt bonds for qualified contaminated site remediation, with limitations.

SECTION 1. ENVIRONMENTAL REMEDIATION TAX CREDIT.

    (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 thereof the following new subpart:

             ``Subpart H--Environmental Remediation Credit
                              ``Sec. 54. Amount of environmental 
                                        remediation credit.
                              ``Sec. 54A. Designation of eligible 
                                        States.
                              ``Sec. 54B. Allocation of credit limits.
                              ``Sec. 54C. Definitions and special 
                                        rules.
``SEC. 54. AMOUNT OF ENVIRONMENTAL REMEDIATION CREDIT.

    ``(a) General Rule.--For purposes of section 38, the environmental 
remediation credit determined under this section is 40 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.
    ``(b) Credit May Not Exceed Allocation.--The environmental 
remediation credit determined under this section with respect to any 
qualified contaminated site shall not exceed the remediation credit 
amount allocated to the taxpayer under section 54B with respect to such 
site.
    ``(c) 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 certifies the 
                environmental remediation plan for such site has been 
                completed, and
                    ``(B) if such Administrator 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.
    ``(d) 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).
    ``(e) Qualified Contaminated Site.--For purposes of this subpart, 
the term `qualified contaminated site' means any contaminated site if 
such site is within a State designated under section 54A(a) for 
participation in the environmental remediation credit program.
    ``(f) Administration by State or Local Government Agencies 
Permitted.--Any reference in this section, section 144(d), or section 
150(b)(7) to the Administrator of the Environmental Protection Agency 
shall include a reference to the head of any State or local government 
agency designated by the Administrator to carry out the Administrator's 
functions under such sections with respect to any site.

``SEC. 54A. DESIGNATION OF ELIGIBLE STATES.

    ``(a) In General.--The Secretary of Housing and Urban Development 
shall designate States under this section for participation in the 
environmental remediation credit program.
    ``(b) Eligibility Requirements.--No State may be designated under 
this section unless--
            ``(1) such State has submitted an application for such a 
        designation to the Secretary of Housing and Urban Development 
        in such manner as such Secretary may require,
            ``(2) such State has established an environmental credit 
        remediation program which shall include--
                    ``(A) procedures for the assessment of contaminated 
                sites located within such State for purposes of 
                determining whether such sites are appropriate for 
                participation in the environmental remediation credit 
                program,
                    ``(B) a credit allocation plan which contains the 
                selection criteria required under subsection (c), and
                    ``(C) provision for non-Federal contributions to 
                the environmental remediation of selected sites through 
                grants, loans, property or income tax abatement, 
                contributions by private parties or non-Federal 
                governmental sources, or any other direct or indirect 
                financial assistance; and
            ``(3) such State has designated a State official 
        responsible for the administration of its environmental 
        remediation credit program.
    ``(c) Selection Criteria.--The selection criteria required under 
this subsection are the following:
            ``(1) The condition of the contaminated site is such that 
        without participation in the environmental remediation credit 
        program redevelopment is unlikely.
            ``(2) The contaminated site has not been in productive use 
        for at least 1 year before participation in the program.
            ``(3) 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.
            ``(4) Environmental remediation and redevelopment are 
        likely to be completed within a reasonable period of time.

``SEC. 54B. ALLOCATION OF CREDIT LIMITS.

    ``(a) Overall Limitation.--For each calendar year after 1995, there 
shall be an overall credit limitation of $200,000,000.
    ``(b) Method of Making Allocation.--
            ``(1) In general.--Any State receiving a portion of the 
        overall credit limitation under subsection (a) may use such 
        portion to make allocations of environmental remediation credit 
        amounts to contaminated sites selected under the credit 
        allocation plan required under section 54A(b)(2)(B).
            ``(2) Period during which allocated amount may be used.--
        Any State receiving a portion of the overall credit limitation 
        for any calendar year may use such portion only to make 
        allocations under paragraph (1) during such calendar year or 
        the following calendar year.

``SEC. 54C. 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 
        are 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.),
                    ``(B) the Resource Conservation and Recovery Act 
                (42 U.S.C. 6901 et seq.), or
                    ``(C) any State or local environmental law or 
                ordinance.
        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, or urea formaldehyde foam 
        insulation.
    ``(b) Environmental Remediation.--For purposes of this subpart, the 
term `environmental remediation' means--
            ``(1) removal or remediation activity in accordance with an 
        approved environmental plan including soil and ground water 
        remediation,
            ``(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,
            ``(4) environmental audits,
            ``(5) remediation of off-site contamination caused by 
        activity on the site, and
            ``(6) any other costs reasonably required by reason of the 
        environmental conditions of the site including demolition of 
        existing contaminated structures, site security, and permit 
        fees necessary for remediation.
    ``(c) Basis Reduction.--The basis of any qualified contaminated 
site shall be reduced by the amount of any credit determined under this 
subpart with respect to such site.
    ``(d) 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 thereof the following 
new paragraph:
            ``(12) the environmental remediation credit under section 
        54(a).''
    (c) Limitation on Carryback.--Subsection (d) of section 39 of such 
Code is amended by adding at the end thereof the following new 
paragraph:
            ``(7)  No carryback of environmental remediation credit 
        before effective date.--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 thereof 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 
thereof the following new item:

                              ``Subpart H--Environmental remediation 
                                        credit.''
    (f) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.
SEC. 2. TAX-EXEMPT FINANCING OF ENVIRONMENTAL REMEDIATION OF QUALIFIED 
              CONTAMINATED SITES.

    (a) In General.--Subsection (e) of section 141 of the Internal 
Revenue Code of 1986 (defining qualified bond) is amended by striking 
``or'' at the end of subparagraph (F), by redesignating subparagraph 
(G) as subparagraph (H), and by inserting after subparagraph (F) the 
following new subparagraph:
                    ``(G) a qualified contaminated site remediation 
                bond, or''.
    (b) Qualified Contaminated Site Remediation Bond.--Section 144 of 
such Code is amended by adding at the end thereof the following new 
subsection:
    ``(d) Qualified Contaminated Site Remediation Bond.--For purposes 
of this part--
            ``(1) In general.--The term `qualified contaminated site 
        remediation bond' means any bond issued as part of an issue 95 
        percent or more of the proceeds of which are to finance--
                    ``(A) the acquisition of a qualified contaminated 
                site, or
                    ``(B) the costs of environmental remediation (as 
                defined in section 54C(b))--
                            ``(i) with respect to such a site which is 
                        owned by the person incurring such costs, and
                            ``(ii) which are incurred pursuant to an 
                        environmental remediation plan for such site 
                        which was approved by the Administrator of the 
                        Environmental Protection Agency.
            ``(2) Limitations.--Such term shall not include any bond 
        issued to provide financing with respect to a qualified 
        contaminated site if--
                    ``(A) any amount of such financing is provided 
                directly or indirectly to any person who is not 
                eligible for the credit determined under section 54 
                with respect to such site by reason of section 54(d),
                    ``(B) less than 60 percent of the amount of the 
                financing so provided with respect to such site is for 
                costs described in paragraph (1)(B), or
                    ``(C) the amount of the financing so provided to 
                acquire such site exceeds the excess of--
                            ``(i) the fair market value of the site 
                        after the completion of the environmental 
                        remediation plan, over
                            ``(ii) the amount of the financing so 
                        provided with respect to such site for costs 
                        described in paragraph (1)(B).
            ``(3) Qualified contaminated site.--For purposes of this 
        subsection, the term `qualified contaminated site' has the 
        meaning given such term by section 54(e).
            ``(4) Restriction on land acquisition not to apply.--
        Section 147(c) shall not apply to any qualified contaminated 
        site remediation bond.''
    (c) Penalty for Failure to Satisfactorily Complete Remediation 
Plan.--Subsection (b) of section 150 of such Code is amended by adding 
at the end thereof the following new paragraph:
            ``(7) Qualified contaminated site remediation bonds.--In 
        the case of financing provided by a qualified contaminated site 
        remediation bond for costs described in section 144(d)(1)(C), 
        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 that the remediation plan under which such 
        costs were incurred was not satisfactorily completed.''
    (d) Clerical Amendments.--
            (1) The section heading for section 144 of such Code is 
        amended by inserting before the period ``qualified contaminated 
        site remediation bond''.
            (2) The table of sections for subpart A of part IV of 
        subchapter B of chapter 1 of such Code is amended by inserting 
        before the period at the end of the item relating to section 
        144 ``; qualified contaminated site remediation bond''.