II 

109TH CONGRESS 

2D SESSION S. 3509 

To amend the Internal Revenue Code of 1986 to provide tax incentives 

for the remediation of contaminated sites. 

IN THE SENATE OF THE UNITED STATES 

JUNE 14, 2006 

Mr. VOINOVICH introduced the following bill; which was read twice and 

referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

tax incentives for the remediation of contaminated sites. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘America’s Brownfield 

5 Cleanup Act’’. 

6 SEC. 2. CREDIT FOR EXPENDITURES TO REMEDIATE CON7 TAMINATED SITES. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 (relating to business related credits) is amended by 

2 adding at the end the following new section: 

3 ‘‘SEC. 45N. ENVIRONMENTAL REMEDIATION CREDIT. 

4 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

5 environmental remediation credit determined under this 

6 section is 50 percent of the qualified remediation expendi7 tures paid or incurred by the taxpayer during the taxable 

8 year with respect to a qualified contaminated site located 

9 in an eligible area. 

10 ‘‘(b) QUALIFIED REMEDIATION EXPENDITURES.— 

11 For purposes of this section, the term ‘qualified remedi12 ation expenditures’ means expenditures, whether or not 

13 chargeable to capital account, in connection with— 

14 ‘‘(1) the abatement or control of any hazardous 

15 substance at the qualified contaminated site in ac16 cordance with an approved remediation plan, 

17 ‘‘(2) the demolition of any structure (or portion 

18 thereof) on such site if any portion of such structure 

19 is demolished in connection with such abatement or 

20 control, 

21 ‘‘(3) the removal and disposal of property in 

22 connection with the activities described in para23 graphs (1) and (2), and 

24 ‘‘(4) the reconstruction of utilities in connection 

25 with such activities. 


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1 Such term includes the cost of financial assurances (in2 cluding bonding) and insurance described in subsection 

3 (g)(4). 

4 ‘‘(c) QUALIFIED CONTAMINATED SITE.—For pur5 poses of this section— 

6 ‘‘(1) IN GENERAL.—The term ‘qualified con7 taminated site’ means any area— 

8 ‘‘(A) which is an eligible response site as 

9 defined in section 101(41) of the Comprehen10 sive Environmental Response, Compensation, 

11 and Liability Act of 1980, 

12 ‘‘(B) which is held by the taxpayer for use 

13 in a trade or business or for the production of 

14 income, or which is property described in sec15 tion 1221(a)(1) in the hands of the taxpayer, 

16 ‘‘(C) at or on which there has been a re17 lease (or threat of release) or disposal of any 

18 hazardous substance, and 

19 ‘‘(D) with respect to which an approved re20 mediation plan and an approved redevelopment 

21 plan are both in effect. 

22 ‘‘(2) NATIONAL PRIORITIES LISTED SITES NOT

23 INCLUDED.—Such term shall not include any site 

24 which is on, or proposed for, the national priorities 

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1 sive Environmental Response, Compensation, and 

2 Liability Act of 1980 (as in effect on the date of the 

3 enactment of this section). 

4 ‘‘(d) HAZARDOUS SUBSTANCE.—For purposes of this 

5 section— 

6 ‘‘(1) IN GENERAL.—The term ‘hazardous sub7 stance’ means— 

8 ‘‘(A) any substance which is a hazardous 

9 substance as defined in section 101(14) of the 

10 Comprehensive Environmental Response, Com11 pensation, and Liability Act of 1980, 

12 ‘‘(B) any substance which is designated as 

13 a hazardous substance under section 102 of 

14 such Act, and 

15 ‘‘(C) any petroleum product (within the 

16 meaning of section 4612(a)(3)). 

17 ‘‘(2) EXCEPTION.—Such term shall not include 

18 any substance with respect to which a removal or re19 medial action is not permitted under section 104 of 

20 such Act by reason of subsection (a)(3) thereof. 

21 ‘‘(e) APPROVED REMEDIATION PLAN.—For purposes 

22 of this section, the term ‘approved remediation plan’ 

23 means, with respect to any site, any plan for the conduct 

24 of the activities described in paragraphs (1) through (4) 

25 of subsection (b)— 


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1 ‘‘(1) which is approved by a State environ2 mental agency— 

3 ‘‘(A) pursuant to a response program 

4 which includes each of the elements listed in 

5 section 128(a)(2) of the Comprehensive Envi6 ronmental Response, Compensation, and Liabil7 ity Act of 1980, and 

8 ‘‘(B) after a determination by such agency 

9 that the plan provides for the abatement or 

10 control of the hazardous substances at such 

11 site, and 

12 ‘‘(2) which includes a written statement from 

13 such agency that such site meets the requirements 

14 of paragraphs (1)(A), (1)(C), and (2) of subsection 

15 (c). 

16 ‘‘(f) APPROVED REDEVELOPMENT PLAN.—For pur17 poses of this section, the term ‘approved redevelopment 

18 plan’ means, with respect to any site, any plan for the 

19 redevelopment of such site which is approved by the State 

20 development agency after a determination by such agency 

21 that the plan provides for the redevelopment of such site 

22 in a manner beneficial to the State and local economy and 

23 to the local community generally. 

24 ‘‘(g) CREDIT MAY NOT EXCEED ALLOCATION.— 


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1 ‘‘(1) IN GENERAL.—The environmental remedi2 ation credit determined under this section with re3 spect to any qualified contaminated site shall not ex4 ceed the credit amount allocated under this section 

5 by the State development agency to the taxpayer 

6 with respect to such site. 

7 ‘‘(2) TIME FOR MAKING ALLOCATION.—An allo8 cation shall be taken into account under paragraph 

9 (1) for any taxable year only if made before the 

10 close of the calendar year in which such taxable year 

11 begins. 

12 ‘‘(3) MANNER OF ALLOCATION.— 

13 ‘‘(A) ALLOCATION MUST BE PURSUANT TO

14 PLAN.—No amount may be allocated under this 

15 subsection to any qualified contaminated site 

16 unless— 

17 ‘‘(i) an approved remediation plan and 

18 an approved redevelopment plan are both 

19 in effect with respect to such site, and 

20 ‘‘(ii) such amount is allocated pursu21 ant to a qualified allocation plan of the 

22 State development agency. 

23 ‘‘(B) QUALIFIED ALLOCATION PLAN.—For 

24 purposes of this paragraph, the term ‘qualified 

25 allocation plan’ means any plan— 


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1 ‘‘(i) which sets forth selection criteria 

2 to be used to determine priorities of the 

3 State development agency in allocating 

4 credit amounts under this section, and 

5 ‘‘(ii) which gives preference in allo6 cating credit amounts under this section to 

7 qualified contaminated sites based on— 

8 ‘‘(I) the extent of poverty, 

9 ‘‘(II) whether the site is located 

10 in an empowerment zone, enterprise 

11 community, or renewal community, 

12 ‘‘(III) whether the site is located 

13 in the central business district of the 

14 local jurisdiction, 

15 ‘‘(IV) the extent of the required 

16 environmental remediation, 

17 ‘‘(V) the extent of the commer18 cial, industrial, or residential redevel19 opment of the site in addition to envi20 ronmental remediation, 

21 ‘‘(VI) the extent of the financial 

22 commitment to such redevelopment, 

23 ‘‘(VII) the amount of new em24 ployment expected to result from such 

25 redevelopment, and 


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1 ‘‘(VIII) whether it is reasonably 

2 expected that under the approved re3 mediation plan at least 25 percent of 

4 the estimated total qualified remedi5 ation expenditures will be borne by 

6 one or more persons who are poten7 tially liable under section 107(a) of 

8 the Comprehensive Environmental Re9 sponse, Compensation, and Liability 

10 Act of 1980. 

11 ‘‘(4) STATES MAY IMPOSE OTHER CONDI12 TIONS.—Nothing in this section shall be construed 

13 to prevent any State from requiring— 

14 ‘‘(A) assurances, including bonding, that 

15 any project for which a credit amount is allo16 cated under this section will be properly com17 pleted or that the financial commitments of the 

18 taxpayer are actually carried out, 

19 ‘‘(B) that the taxpayer obtain insurance 

20 which reimburses qualified remediation expendi21 tures in excess of the total estimated amount of 

22 such expenditures, or 

23 ‘‘(C) that the taxpayer obtain insurance 

24 covering liability for personal injury, death, or 

25 property damage. 


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1 ‘‘(h) STATE ENVIRONMENTAL REMEDIATION CREDIT

2 CEILING.—For purposes of this section— 

3 ‘‘(1) LIMITATION.—The aggregate credit 

4 amounts allocated by the State development agency 

5 during any calendar year shall not exceed the State 

6 environmental remediation credit ceiling applicable 

7 to such State for such calendar year. 

8 ‘‘(2) DETERMINATION OF LIMITATION

9 AMOUNT.—The State environmental remediation 

10 credit ceiling applicable to any State for any cal11 endar year shall be an amount equal to the sum of— 

12 ‘‘(A) such State’s share of the national en13 vironmental remediation credit limitation for 

14 the calendar year, 

15 ‘‘(B) the unused State environmental re16 mediation credit ceiling (if any) of such State 

17 for the calendar year, 

18 ‘‘(C) the amount of State environmental 

19 remediation credit ceiling returned in the cal20 endar year, plus 

21 ‘‘(D) the amount (if any) allocated under 

22 paragraph (5) to such State by the Secretary. 

23 ‘‘(3) NATIONAL ENVIRONMENTAL REMEDIATION

24 CREDIT LIMITATION.— 


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1 ‘‘(A) IN GENERAL.—The national environ2 mental remediation credit limitation for each 

3 calendar year is $1,000,000,000. 

4 ‘‘(B) STATE’S SHARE OF LIMITATION.—A 

5 State’s share of such limitation is the amount 

6 which bears the same ratio to the limitation ap7 plicable under subparagraph (A) for the cal8 endar year as such State’s population bears to 

9 the population of the United States. 

10 ‘‘(4) UNUSED STATE ENVIRONMENTAL REMEDI11 ATION CREDIT CEILING.—The unused State environ12 mental remediation credit ceiling for any calendar 

13 year is the excess (if any) of— 

14 ‘‘(A) the State environmental remediation 

15 credit ceiling applicable to the State for the pre16 ceding calendar year (determined without re17 gard to paragraph (2)(B)), over 

18 ‘‘(B) the aggregate environmental remedi19 ation credit amount allocated by the State for 

20 such preceding year. 

21 ‘‘(5) UNUSED ENVIRONMENTAL REMEDIATION

22 CREDIT ALLOCATED AMONG STATES AFTER 1-YEAR

23 CARRYFORWARD.— 

24 ‘‘(A) IN GENERAL.—The excess unused en25 vironmental remediation credit of a State for 


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1 any calendar year shall be assigned to the Sec2 retary for allocation among qualified States for 

3 the succeeding calendar year. 

4 ‘‘(B) EXCESS UNUSED ENVIRONMENTAL

5 REMEDIATION CREDIT.—For purposes of this 

6 paragraph, the excess unused environmental re7 mediation credit of a State for any calendar 

8 year is the excess (if any) of— 

9 ‘‘(i) the unused State environmental 

10 remediation credit ceiling for the preceding 

11 calendar year, over 

12 ‘‘(ii) the aggregate environmental re13 mediation credit amount allocated by the 

14 State for such preceding year. 

15 ‘‘(C) FORMULA FOR ALLOCATION OF EX16 CESS UNUSED ENVIRONMENTAL REMEDIATION

17 CREDIT AMONG STATES.—Rules similar to the 

18 rules of clauses (iii) and (iv) of section 

19 42(h)(3)(D) shall apply for purposes of this 

20 paragraph. 

21 ‘‘(6) POPULATION.—For purposes of this sub22 section, population shall be determined in accord23 ance with section 146(j). 

24 ‘‘(7) INFLATION ADJUSTMENT.—In the case of 

25 any calendar year after 2006, the $1,000,000,000 


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1 amount contained in paragraph (3) shall be in2 creased by an amount equal to— 

3 ‘‘(A) such dollar amount, multiplied by 

4 ‘‘(B) the cost-of-living adjustment deter5 mined under section 1(f)(3) for the calendar 

6 year, determined by substituting ‘calendar year 

7 2005’ for ‘calendar year 1992’ in subparagraph 

8 (B) thereof. 

9 Any increase determined under the preceding sen10 tence shall be rounded to the nearest multiple of 

11 $500,000. 

12 ‘‘(i) OTHER DEFINITIONS AND SPECIAL RULE.—For 

13 purposes of this section— 

14 ‘‘(1) ELIGIBLE AREA.— 

15 ‘‘(A) IN GENERAL.—The term ‘eligible 

16 area’ means the entire area encompassed by a 

17 local governmental unit or Indian tribal govern18 ment if such entire area contains at least 1 cen19 sus tract having a poverty rate of at least 20 

20 percent. 

21 ‘‘(B) USE OF EQUIVALENT COUNTY DIVI22 SIONS.—In the case of any area which is not 

23 tracted for population census tracts, the equiva24 lent county divisions (as defined by the Bureau 

25 of the Census for purposes of defining poverty 


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1 areas) shall be treated as census tracts for pur2 poses of subparagraph (A). 

3 ‘‘(C) USE OF CENSUS DATA.—For pur4 poses of this paragraph, population and poverty 

5 rate shall be determined by the most recent de6 cennial census data available. 

7 ‘‘(2) STATE ENVIRONMENTAL AGENCY.—The 

8 term ‘State environmental agency’ means any State 

9 agency specifically authorized by gubernatorial act 

10 or State statute to carry out the functions and re11 sponsibilities of a State environmental agency for 

12 purposes of this section. 

13 ‘‘(3) STATE DEVELOPMENT AGENCY.—The 

14 term ‘State development agency’ means any State 

15 agency specifically authorized by gubernatorial act 

16 or State statute to carry out the functions and re17 sponsibilities of a State development agency for pur18 poses of this section. 

19 ‘‘(4) POSSESSIONS TREATED AS STATES.—The 

20 term ‘State’ includes a possession of the United 

21 States. 

22 ‘‘(5) SPECIAL RULES FOR HAZARDOUS SUB23 STANCES THAT ARE PETROLEUM PRODUCTS.—In the 

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1 ardous substance that is a petroleum product, the 

2 following rules shall apply: 

3 ‘‘(A) The requirement of subsection 

4 (c)(1)(A) shall be deemed to be met. 

5 ‘‘(B) The requirement of subsection 

6 (e)(1)(A) shall be deemed to be met. 

7 ‘‘(C) Subsection (e)(2) shall be applied by 

8 substituting ‘(1)(C) and (2)’ for ‘(1)(A), (1)(C), 

9 and (2)’. 

10 ‘‘(j) CREDIT MAY BE ASSIGNED.— 

11 ‘‘(1) IN GENERAL.—If a taxpayer elects the ap12 plication of this subsection for any taxable year, the 

13 amount of credit determined under this section for 

14 such year which would (but for this subsection) be 

15 allowable to the taxpayer shall be allowable to the 

16 person designated by the taxpayer. The person so 

17 designated shall be treated as the taxpayer for pur18 poses of this title (other than this paragraph). 

19 ‘‘(2) TREATMENT OF AMOUNTS PAID FOR AS20 SIGNMENT.—If any amount is paid to the person 

21 who assigns the credit determined under this sec22 tion, no portion of such amount shall be includible 

23 in such person’s gross income. 


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1 ‘‘(k) RECAPTURE OF CREDIT IF APPROVED REMEDI2 ATION PLAN OR APPROVED REDEVELOPMENT PLAN NOT

3 PROPERLY COMPLETED.— 

4 ‘‘(1) IN GENERAL.—If— 

5 ‘‘(A) the State environmental agency deter6 mines that the approved remediation plan for 

7 the qualified contaminated site was not properly 

8 completed, or 

9 ‘‘(B) the State development agency deter10 mines that the approved redevelopment plan for 

11 such site was not properly completed, 

12 the taxpayer’s tax under this chapter for the taxable 

13 year in which such determination is made shall be 

14 increased by the credit recapture amount. 

15 ‘‘(2) CREDIT RECAPTURE AMOUNT.—For pur16 poses of paragraph (1), the credit recapture amount 

17 is an amount equal to the sum of— 

18 ‘‘(A) the aggregate decrease in the credits 

19 allowed to the taxpayer under section 38 for all 

20 prior taxable years which would have resulted if 

21 the credit allowable by reason of this section 

22 were not allowed, plus 

23 ‘‘(B) interest at the overpayment rate es24 tablished under section 6621 on the amount de25 termined under subparagraph (A) for each 


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1 prior taxable year for the period beginning on 

2 the due date for filing the return for the prior 

3 taxable year involved. 

4 No deduction shall be allowed under this chapter for 

5 interest described in subparagraph (B). 

6 ‘‘(3) SPECIAL RULES.— 

7 ‘‘(A) TAX BENEFIT RULE.—The tax for 

8 the taxable year shall be increased under para9 graph (1) only with respect to credits allowed 

10 by reason of this section which were used to re11 duce tax liability. In the case of credits not so 

12 used to reduce tax liability, the carryforwards 

13 and carrybacks under section 39 shall be appro14 priately adjusted. 

15 ‘‘(B) NO CREDITS AGAINST TAX.—Any in16 crease in tax under this subsection shall not be 

17 treated as a tax imposed by this chapter for 

18 purposes of determining the amount of any 

19 credit or the tax imposed by section 55. 

20 ‘‘(l) DENIAL OF DOUBLE BENEFIT.— 

21 ‘‘(1) IN GENERAL.—No deduction shall be al22 lowed for that portion of the qualified remediation 

23 expenditures otherwise allowable as a deduction for 

24 the taxable year which is equal to the amount of the 


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1 credit determined for such taxable year under this 

2 section. 

3 ‘‘(2) SIMILAR RULE WHERE TAXPAYER CAP4 ITALIZES RATHER THAN DEDUCTS EXPENSES.—If— 

5 ‘‘(A) the amount of the credit determined 

6 for the taxable year under this section, exceeds 

7 ‘‘(B) the amount allowable as a deduction 

8 for such taxable year for qualified remediation 

9 expenditures (determined without regard to 

10 paragraph (1)), 

11 the amount chargeable to capital account for the 

12 taxable year for such expenditures shall be reduced 

13 by the amount of such excess. 

14 ‘‘(3) CONTROLLED GROUPS.—In the case of a 

15 corporation which is a member of a controlled group 

16 of corporations (within the meaning of section 

17 41(f)(5)) or a trade or business which is treated as 

18 being under common control with other trades or 

19 businesses (within the meaning of section 

20 41(f)(1)(B)), this subsection shall be applied under 

21 rules prescribed by the Secretary similar to the rules 

22 applicable under subparagraphs (A) and (B) of sec23 tion 41(f)(1). 

24 ‘‘(m) COST OF REMOVAL OR REMEDIAL ACTION.— 

25 The credit allowed under this section shall not be treated 


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1 as a cost of removal or remedial action incurred by the 

2 United States for purposes of section 107(a)(4)(A) of the 

3 Comprehensive Environmental Response, Compensation, 

4 and Liability Act of 1980.’’. 

5 (b) EXCLUSION BY SITE OWNER OF REMEDIATION

6 EXPENDITURES PAID BY POTENTIALLY RESPONSIBLE

7 PARTIES.—Part III of subchapter B of chapter 1 of such 

8 Code is amended by inserting after section 139A the fol9 lowing new section: 

10 ‘‘SEC. 139B. REMEDIATION CONTRIBUTIONS BY POTEN11 TIALLY RESPONSIBLE PARTIES. 

12 ‘‘(a) IN GENERAL.—Gross income shall not include 

13 any amount received as a qualified remediation contribu14 tion. 

15 ‘‘(b) QUALIFIED REMEDIATION CONTRIBUTION.— 

16 For purposes of this section, the term ‘qualified remedi17 ation contribution’ means any amount which is paid to or 

18 for the benefit of the owner of any property by a poten19 tially responsible party (within the meaning of the Com20 prehensive Environmental Response, Compensation, and 

21 Liability Act of 1980) with respect to such property for 

22 qualified remediation expenditures (as defined in section 

23 45N(b)) with respect to such property. 

24 ‘‘(c) DENIAL OF DOUBLE BENEFIT.—Notwith25 standing any other provision of this subtitle— 


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1 ‘‘(1) no deduction or credit shall be allowed (to 

2 the person for whose benefit a qualified remediation 

3 contribution is made) for, or by reason of, any ex4 penditure to the extent of the amount excluded 

5 under this section with respect to such expenditure, 

6 and 

7 ‘‘(2) no increase in the basis of any property 

8 shall result from any amount excluded under this 

9 section with respect to such property.’’. 

10 (c) CREDIT TREATED AS BUSINESS CREDIT.—Sec11 tion 38(b) of such Code is amended by striking ‘‘and’’ at 

12 the end of paragraph (29), by striking the period at the 

13 end of paragraph (30) and inserting ‘‘, plus’’, and by add14 ing at the end the following new paragraph: 

15 ‘‘(31) the environmental remediation credit de16 termined under section 45N(a).’’. 

17 (d) CLERICAL AMENDMENTS.— 

18 (1) The table of sections for subpart D of part 

19 IV of subchapter A of chapter 1 of such Code is 

20 amended by adding at the end the following new 

21 item: 

‘‘Sec. 45N. Environmental remediation credit.’’. 

22 (2) The table of sections for part III of sub23 chapter B of chapter 1 of such Code is amended by 


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1 inserting after the item relating to section 139A the 

2 following new item: 

‘‘Sec. 139B. Remediation contributions by potentially responsible parties.’’. 

3 (e) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years beginning after 

5 December 31, 2005. 

Æ 


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